Sears 'lands' back in the catalog biz
May 20, 2002,
Hoffman Estates, IL — In a move that puts the company back in the catalog business in a major way, Sears' acquisition of Lands' End also raises the price point and quality level of apparel and home textiles that it will merchandise.
The proposed acquisition comes as Sears is beginning a complete repositioning of its full-line stores. This will include an expansion of its Whole Home home textiles private brand, according to Alan Lacy, Sears chairman and ceo. This expansion also will see the rollout of a closet shop program to 650 stores in August as well as an expansion of home accents — area rugs, lamps, picture frames and ready-made window treatments. The home accents expansion, Lacy noted, will use the space being vacated by the phasing out of RTA furniture that will take place over a two-year period as the company focuses on take-with items and self service.
Lands' End, with its catalog and Internet business, is the largest American specialty apparel company, with 2001 sales of $1.6 billion. Its demographics, according to Alan Lacy, Sears chairman and ceo, overlap with Sears' hardlines customer base, but it has limited softline overlaps.
Sears will start carrying Lands' End apparel in the fall, as well as a selection of home fashions, Lacy said. Home fashions is a strong performer at Lands' End, recording a 12 percent increase for the fourth quarter.
The Lands' End apparel will represent Sears' "best quality flagship apparel," while it's soon-to-debut Covington private brand will represent the better price points.
There are no plans for separate Lands' End shops in the Sears stores, Lacy added. When fully rolled out, as Sears completes its repositioning program, Lands' End will have about 15 percent to 20 percent of apparel square footage. Lacy has set 2004 as the target for completion of the remodelling program.
Lands' End will continue to be based in Dodgeville, WI. David Dyer, current president and ceo, will continue in that position and will report to Lacy. In addition, Dyer will oversee Sears' customer direct business, which includes its Internet site as well as shop-at-home home furnishings catalogs produced and distributed by Direct Marketing Services Inc. Dennis Honan, Sears vp, general manager of customer direct will report to Dyer.
Sears and Lands' End have signed a definitive agreement for $62 per share of Lands' End, or approximately $1.9 billion.