Sears To Purchase Lands End

Discussion in 'Archived Threads 2001-2004' started by Peter Kline, May 13, 2002.

  1. Peter Kline

    Peter Kline Cinematographer

    Joined:
    Feb 9, 1999
    Messages:
    2,393
    Likes Received:
    0
    Trophy Points:
    0
    This is one of the great retail "mergers" in recent history.
    Sears to Acquire Lands' End in Deal
    Mon May 13,10:49 AM ET
    By DAVE CARPENTER, AP Business Writer
    CHICAGO (AP) - In a bold attempt to revive its long-struggling retail business, Sears, Roebuck and Co. is buying catalog retailer Lands' End Inc. for about $1.9 billion, the companies announced Monday.
    The announcement sent Lands' End shares up more than 20 percent in early trading while Sears shares slipped,
    Lands' End is the largest specialty apparel catalog company and the biggest Internet seller of apparel in the United States. Under a deal expected to be completed in June, it will become a wholly owned subsidiary of Sears, continuing to be headquartered in Dodgeville, Wis.
    "This transaction brings together two of the great names in American retailing, and in the process strengthens both companies and brands," said Alan Lacy, Sears chairman and chief executive.
    "Needless to say it's a lot of money, but ... strategically it takes us another step on the journey of our turnaround at Sears," Lacy told analysts in a conference call Monday.
    The move comes with Sears, one of the biggest U.S. retailers, in the midst of an overhaul of its 870 full-line stores after years of lackluster apparel sales.
    With discount chains such as Kohl's and Target having taken away some of its business in recent years, Sears is easing away from the traditional department-store model and adding more discounting, more self-service and an increased emphasis on home appliances, a longtime strength. It also is adding a Sears-only clothing line under the Covington name this fall.
    Hoffman Estates, Ill.-based Sears will introduce a selection of Lands' End products into many of its stores by this fall and is expected to complete product rollout to stores by fall 2003. Lacy said Lands' End apparel will complement the Covington brand.
    Lands' End — with $1.6 billion in revenue in 2001 — will continue to offer its complete product line direct to customers through its catalogs and online at www.landsend.com.
    Gary C. Comer, Lands' End's founder and chairman, will remain in charge of the business, reporting to Lacy after the transaction closes. He also will assume responsibility for Sears' customer-direct business, which includes sears.com, catalogs and specialty merchandise.
    Under terms of the deal, Sears will make a tender offer for all shares of Lands' End stock for $62 a share in cash. That is a 21.5 percent premium over Lands' End's closing price of $51.02 a share on Friday in trading on the New York Stock Exchange (news - web sites).
    In morning trading, Sears shares fell 64 cents to $51.17 and Lands End shares rose $10.70, or 21 percent, to $61.72.
    Retail analyst Bernard Sosnick of Fahnestock and Co., commenting on the conference call, called Sears' acquisition a "brilliant strategic move."
    Comer and other shareholders have agreed to tender their shares, representing about 55 percent of the outstanding common stock. The tender offer requires that at least two-thirds of the fully diluted shares be tendered.
    Forbes magazine, in its latest ranking of the richest people, estimated Comer's wealth in March at $1 billion.
    Lacy said the transaction — which has approval of both companies' boards of directors — does not alter Sears outlook of a 17 percent earnings increase for the year.
     
  2. Leila Dougan

    Leila Dougan Screenwriter

    Joined:
    Mar 27, 2002
    Messages:
    1,352
    Likes Received:
    0
    Trophy Points:
    0
    Very interesting, indeed. I love Land's End. However, Sears leaves something to be desired, in fact I can't stand the store (unless I need to buy tools). I guess only time will tell what Sears is going to do to Land's End but somehow I have a sneaking suspicion it's not going to be pretty. [​IMG]
     
  3. John Garcia

    John Garcia Executive Producer

    Joined:
    Jun 24, 1999
    Messages:
    11,571
    Likes Received:
    25
    Trophy Points:
    0
    Location:
    NorCal
    Real Name:
    John
    I agree, I pretty much hate Sears. If they didn't carry Craftsman, I would never go there.

    They basically have to do something, otherwise they will go the way of the dodo and Montgomery Wards.
     
  4. Peter Kline

    Peter Kline Cinematographer

    Joined:
    Feb 9, 1999
    Messages:
    2,393
    Likes Received:
    0
    Trophy Points:
    0
    They indeed need to do something about their mens clothing department and this would seem to be it. Probably isn't good news for Sears carrying Levi Strauss clothes in the future, however. One company that may benefit is Walden Mills, which recently filed for bankruptcy reorganization. They manufacture Polartec fleece which is used in many Lands End fall and winter clothes.
     
  5. Philip_G

    Philip_G Producer

    Joined:
    Nov 13, 2000
    Messages:
    5,030
    Likes Received:
    0
    Trophy Points:
    0
    even going to sears for tools is painful, there's always 15 people workin in tools milling about BSing with each other, every damn one of them has to ask me if I need help.
     
  6. Peter Kline

    Peter Kline Cinematographer

    Joined:
    Feb 9, 1999
    Messages:
    2,393
    Likes Received:
    0
    Trophy Points:
    0
    I was in the local tool department of Sears to buy a couple of screw drivers. I got to the check out counter and the Sears employee was on the phone. It was a personal call. He looked at me, turned around and continued to talk to his wife. About 5 minutes later a manager came over and told him to hang up and take care of the customer (me). I'd rather have them bother me then ignore me.
     
  7. Dennis Reno

    Dennis Reno Supporting Actor

    Joined:
    Jun 30, 1997
    Messages:
    862
    Likes Received:
    0
    Trophy Points:
    0
    Considering I purchase the majority of my casual clothing through Land's End, I'm less than thrilled about the acquisition. LE's ability to custom tailor clothing is what attracted me in the first place. I'm not aware of another clothing outlet that will hem your slacks at 33 1/4" at no additional cost!

    The fact that Sears plans on carrying the LE clothing in their stores is not a good sign. My guess is the LE clothing line will degenerate to Docker's style - high price, low quality.
     
  8. Peter Kline

    Peter Kline Cinematographer

    Joined:
    Feb 9, 1999
    Messages:
    2,393
    Likes Received:
    0
    Trophy Points:
    0
    Dennis,

    Your're being very pessimistic and shouldn't be. Lands' End will continue their mail order business and it will be run by current management. As a matter of fact, they're taking over all of Sears mail order business as well. I suspect that Sears, at least initially, will only handle specific product that doesn't require much custom work: slacks, shirts, jackets et al. Sears will sell mens, womens and childrens product from the Lands' End catalog spread throughout the store.
     
  9. Dennis Reno

    Dennis Reno Supporting Actor

    Joined:
    Jun 30, 1997
    Messages:
    862
    Likes Received:
    0
    Trophy Points:
    0
    Peter - I think in the short term you are correct. My concern lies mainly in the future. Sears, IMO, has become the typical B&M (brick and mortar) store. Service has gone the way of the dodo at most Sears stores. Service is what makes LE a great place to shop. I use LE for personal attire as well as corporate logo merchandise. They always are a pleasure to deal with and go above and beyond what other places do to please the customer.

    I hope Sears will leave LE alone and allow LE people to run the show. But far too often two management teams clash and heads roll. Since Sears holds the cards now its most likely LE mgt. that would be shown the door. If that happens I predict Sears will run the LE brand into the ground. Pessimistic? Yes. Realistic? Unfortunately yes.

    I hope it doesn't happen! I hate going to the store!
     
  10. Scott Strang

    Scott Strang Screenwriter

    Joined:
    May 28, 1999
    Messages:
    1,145
    Likes Received:
    4
    Trophy Points:
    0
    Is anyone else affraid that by purchasing Land's End clothing post merger that we'll be getting Sears clothes instead.
     
  11. Peter Kline

    Peter Kline Cinematographer

    Joined:
    Feb 9, 1999
    Messages:
    2,393
    Likes Received:
    0
    Trophy Points:
    0
    Dennis,

    At the press conference yesterday the Sears CEO and LE CEO both reiterated that the current management at LE would remain in place. Sears is not absorbing the company, it is making it a subsidiary. Sears is a marketing company, all the products under their proprietary names are made for them by third parties. LE will continue to run their catalog and Inlet stores. Sears is revamping their entire apparel division. They're dropping most of the names they now have and introducing a low-price line called Covington. LE will be their upscale line eventually being about 20% of the total clothing sold by them. Indeed time will tell, but if Sears can keep their Craftsmen tools high quality, they can keep LE the same.

    In answer to Scott: No.
     
  12. Peter Kline

    Peter Kline Cinematographer

    Joined:
    Feb 9, 1999
    Messages:
    2,393
    Likes Received:
    0
    Trophy Points:
    0
    Double Post. Sorry.
     
  13. Bill_D

    Bill_D Supporting Actor

    Joined:
    Dec 10, 2001
    Messages:
    755
    Likes Received:
    0
    Trophy Points:
    0
    Fine and Dandy, just as long as they keep their Craftsman hands off of Eddie Bauer!
     
  14. Brian Perry

    Brian Perry Cinematographer

    Joined:
    May 6, 1999
    Messages:
    2,807
    Likes Received:
    0
    Trophy Points:
    0
    It will be interesting to see if the merger affects Lands' End's return policy. There was an article in the WSJ yesterday that discussed how several retailers are making returns way more restrictive, partly because of customer abuse. My favorite example was the guy who returned a video camcorder, saying it was defective. He didn't realize, however, that he had left a videotape in the camcorder which showed him holding it while diving into a swimming pool.
     

Share This Page