Sears may spin off Lands' End, Auto Center

October 29, 2013

Flickr/Eric Allix Rogers
Sears may spin off its Lands’ End business.

Sears Holdings might split off its Lands’ End and Auto Center businesses. It’s one of the strategies the retailer is considering in its turnaround efforts.

The Hoffman Estates-based company reported another quarter of declining sales. Same-store sales for the quarter ending October 26 fell 3.7 percent. The parent company of Sears and Kmart expects a net loss close to $550 million for the third quarter.

Sears announced Tuesday it would likely reposition its auto service and pursue a spin-off of its Lands’ End business rather than an outright sale. This would allow Sears to share cash flow with another entity.

But equity analyst Paul Swinand with Morningstar says Sears might just be testing the waters and that the right price could trigger a sale.

“If Sears itself looks kind of distressed, then buyers might be tempted to wait hoping to get it at a lower price when Sears was in deeper trouble. So this is a little bit of posturing,” he said.

Swinand says with increasing competition from big box stores and the Internet, the company needs to improve its core retail business.

Sears plans to continue selling off its more unprofitable stores.