Sears Holdings Corporation said in a statement it's evaluating separating both its Lands' End business and Sears
Auto Center (“SAC”) business.
“We believe separating the management of
these two businesses from Sears Holdings would allow them to pursue
their own strategic opportunities, optimize their capital structures,
attract talent, and allocate capital in a more focused manner while
bringing our business unit structure to life outside of the Sears
Holdings portfolio,” Sears said in a statement.
It added, “Regarding Lands' End, we believe that Lands'
End is an iconic brand with the potential to become a more global brand,
and we presently anticipate that any separation, if pursued, would not
be structured as a sale but rather through a transaction that would
allow existing shareholders the opportunity to benefit from the
significant potential for value creation over the long term.”
Sears also Sears Canada had sold five store leases to
Cadillac Fairview Corporation Limited for total consideration of $400
million Canadian. Sears Holdings said it is also working with the board and
management of Sears Canada with a goal of increasing the value of its
51 percent interest and realizing significant cash proceeds to support its
transformation and to create value for our shareholders. “The current
market value of our 51% interest in Sears Canada is over $675 million.
We believe that the maximization of value of our stake in Sears Canada
will improve our financial position and our ability to execute on our
strategic transformation,” said Edward S. Lampert, Sears Holdings' Chairman and Chief Executive Officer, in a statement.
Finally, Sears Holdings announced an update regarding its operating
performance for the third quarter ending November 2, 2013. Comparable
store sales for the twelve-week period ended Oct. 26, 2013 declined
3.7 percent, with a decline of 4.8 percent for Sears Domestic stores and 2.6 percent for
Kmart stores. Reflecting the challenging overall economic and highly
competitive environment, and higher Shop Your Way (“SYW”) Rewards
expense similar to our experience in the second quarter ended on Aug.
3, 2013 , the company expects third quarter Adjusted
EBITDA to be in an approximate range of between negative $250 million
to $300 million versus the prior year's quarter Adjusted EBITDA of
negative $156 million, which consisted of negative $164 million for SHC
Domestic and positive $8 million for Sears Canada.
Sears wrote, “Despite the
increased operating loss, we have managed our inventory levels and
capital expenditures more efficiently to mitigate the impact of this
loss on our cash flow. We continue to see improvement in our SYW
Rewards member performance metrics, including higher member penetration,
higher points redemptions and our more engaged members shopping more
frequently. With respect to our previously announced objectives, as of
this update, we have generated approximately $700 million of asset
monetization proceeds and are on track to reduce inventory at peak, year
over year, by $500 million as well as reduce fixed expenses by $200
million for the full year. In addition, we successfully completed a
$1.0 billion, 5-year term loan.”