NEW YORK — Sears is considering separating its Lands’ End and Sears Auto Center businesses from the rest of the company as it seeks to focus its attention on bolstering its business at its Sears and Kmart stores.
The retailer also plans to continue closing some of its unprofitable stores as it moves ahead on its turnaround efforts.
The moves come as Sears Holdings Corp., headed by hedge fund billionaire Eddie Lampert, announced another quarter of declining sales. The company has been working for some time to cut costs and lower its debt, but it’s been an uphill battle.
“(Sears) equity remains a melting ice cube, with asset sales and spinoffs the clearest path to justifying the share price,” noted Greg Melich, an analyst at International Strategy & Investment Group LLC in a report published on Tuesday.
Sears said Tuesday that it would likely pursue a spinoff of Lands’ End and not a sale. The retailer purchased the catalog retailer in 2002 amid high hopes among Wall Street that it would help boost the image of Sears and bolster its clothing departments.
But Brian Sozzi, CEO and chief equities strategies at Belus Capital Advisors, says that Sears hasn’t done much to display it well in the stores.
“The merchandise looks very poor in the stores,” he said. “The consumer doesn’t have an emotional connection.”
Sears also said that it has already started repositioning Sears Auto Center around services other than tires and is evaluating strategic options for the business.
Sears anticipates closing unprofitable stores, including those locations whose leases are set to expire soon. The retailer said that it would take the capital from the unprofitable locations and redeploy it elsewhere.
In addition, Sears Canada is selling five store leases to Cadillac Fairview Corp. for 400 million Canadian dollars. ($383.5 million). The deal is expected to close in the next 10 business days.
The Hoffman Estates, Ill., company also announced that its third-quarter sales at stores open at least a year fell 3.7 percent. The figure dropped 4.8 percent for Sears locations and declined 2.6 percent for Kmart stores.
Sales at stores open at least a year is a key gauge of a retailer’s health because it excludes results from stores recently opened or closed.
Sears, which has nearly 2,500 stores in the U.S. and Canada, expects to report its quarterly financial results on Nov. 21.
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