Sears to spin off Lands’ End
Hoffman Estates, Ill. — In a not-so-unexpected move, Sears Holdings Corp. on Friday said it had filed to spin off its Lands’ End unit.
Sears has been selling or spinning off assets during the past few years as it struggles to turn around its business. The company sold its Orchard Supply Hardware Stores and its Sears Hometown and Outlet Stores businesses last year. In October, Sears said it would consider strategic alternatives for its line of auto centers. Sears also is selling some store leases in Canada.
Lands’ End, which Sears bought in 2002, generated sales of $1.59 billion in 2012, down from $1.73 billion in 2011. In a separate statement, Lands’ End said that it planned to list on the Nasdaq under the symbol "LE."
Sears intends to spin off Lands’ End through the pro rata distribution of all of the shares of Lands’ End common stock.
The spin-off is subject to the approval of the board of directors of Sears Holdings.
Retailers succeed by growing, not by shrinking. Sears/KMart is in its sunset years and is disappearing due to asset sales.
Big Lots focused on U.S. with new merchant team
Eight months into his role as CEO and with a new merchandising organization in place, David Campisi is following a familiar blueprint to reinvigorate the performance of Big Lots — making hard choices to streamline operations, implementing new merchandising strategies andloweringnear-term expectations.
Each of thesesituations was evident after Big Lots reported third-quarter results which saw consolidated same-store sales fall 2.5% during the third quarter ended Nov. 2 and the company reported a loss from continuing operations of $9.5 million, or 17 cents a share, compared to a loss the prior year of $6 million, or 10 cents a share.
The operator of more than 1,500 U.S. storesnow expects fourth-quarter same-store sales to decline in the low- to mid-single digits and total sales are expected to fall between 6% and 8%, although much of that decline is due to the comparison of a 13-week 2013 fourth quarter to a 14-week 2012 fourth quarter. To improve matters in 2014, the company decided to shed its 73-unit Canadian business which was acquired in 2011 and has a new merchandising and marketing organizationpursuing a range of initiatives to generate traffic and increase transaction size.
“Throughout the last two years, we have invested in this business and our team in Canada has worked diligently to turn it around,” the company offered in a statement. “However, we have not been able to gain the necessary traction in the Canadian marketplace that had originally been anticipated and believe that the significant further capital investments and execution risk associated with continuing to pursue a turnaround would not be in the best interests of our company and shareholders.”
To improve its fortunes in the U.S., CEO Campisi has restructured much of the senior leadership team in recent months and tempered expectations for sales and profitsenabling the company tobegin the new year with a relatively clean slate.
Campisi, himself a veteran retail executive with a background in merchandising, joined Big Lots eight months ago after holding senior leadership roles at the Sports Authority, Kohl’s and Fred Meyer. One of his first moves was to bring in Andrew Stein in late October to serve as chief customer officer. Stein is tasked with leading the retailer’s marketing efforts, changing the way Big Lots communicates with customers and driving engagement with new shopper segments via social media. Stein came to Big Lots from Kmart where he served as chief marketing officer and led the development of innovative strategies.
The hiring of Stein was followed up with the appointment of Richard Chene as chief merchandising officer one month later. Chene joined Big Lots from the Kitchen Collection where he served as CEO, but his prior experience includes senior merchandising roles at retailers as diverse as Petco, Sears Holdings, Giant Eagle and May Company.
More recently, the company restructured its merchandising group with two new hires and the promotion of a relative newcomer who are aligned in three key areas of food and consumables, furniture and home décor, and seasonal, toys and electronics. The company promoted Trey Johnson, who had recently joined Big Lots as a divisional merchandise manager of food in August, to the role of SVP/GMM of food and consumables. Prior to Big Lots, Johnson held merchandising roles with Family Dollar, Sears Holdings, Walmart and SuperValu.
Overseeing the furniture and home décor area is Martha Withers who was hired as SVP/GMM after serving in merchandising roles at Stage Stores, Stein Mart and May Department Stores. Lucy Cindric was hired as SVP/GMM for seasonal, toys and electronics after holding merchanding roles with Stage Stores, Walmart and the May Company, Foley’s and Dayton Hudson department store chains.
“Our new management team remains focused on identifying the best opportunities in the U.S. to serve our target customer in a manner that brings value to our customers, shareholders and associates,” the company said in a statement. “The strategic decision to exit Canada will enable us to focus our resources on introducing e-commerce and omnichannel capabilities, rolling out coolers and freezers to our chain of stores, launching a furniture financing program, significantly realigning our merchandising organization, and moving swiftly to implement our ‘edit to amplify’ merchandising strategy. These bold steps forward all possess the singularly focused goal of strengthening the Big Lots brand and reinvigorating our U.S. business."
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Teens and tweens keep spending at Five Below
Specialty retailer Five Below offered a somewhat muted outlook for holiday sales despite posting impressive growth in third-quarter same-store sales and achieving record expansion in 2013.
The company has opened 60 new stores this year and its same-store sales grew 9% during the period ended Nov. 2. Of the new stores opened this year, 28 came online during the third quarter and 11 of those were in Dallas, a new market for the rapidly expanding company.
"We are pleased to have delivered another solid quarter, with a 28% increase in sales and a 35% increase in adjusted operating income. Our results once again demonstrate the appeal of the Five Below value proposition [of] trend-right product that targets our core teen and pre-teen customer at the $1 to $5 price points,” said company co-founder and CEO Thomas Vellios. “Our team successfully completed the new store program for 2013 with the opening of 60 net new stores, bringing our total store count to 304. We are ready for the all-important fourth quarter. With our broad assortment of giftable merchandise, we look forward to delighting our customers when they shop our stores this holiday season."
Despite those accomplishments, Vellios offered a modest outlook for the company’s fourth quarter sales performance with a forecast that envisions a 4% comp increase negatively affected by the compressed season and difficult prior year comparisons. Total sales are expected to range from $214 million to $217 million while profits on an adjusted basis are expected to range from $26.8 million to $27.9 million. Those figures were enough for the company to increase its full year sales forecast to a range of $538 million to $541 million from earlier guidance in the range of $531 million to $536 million. The company also increased its full-year profit forecast slightly to a range of adjusted net income of $37.9 million to $39 million, or 70 cents to 72 cents a share, compared to prior guidance of 68 cents to 71 cents a share.
In the third quarter, total sales grew nearly 28% to $110.7 million from $86.6 million. Net income adjusted to exclude expenses related stock options granted to the company’s founders increased 62.5% to $2.6 million, or five cents a share, from $1.6 million, or three cents a share.
So far this year, Five Below’s same-store sales are up 6.6%.
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