Sears boosts brand image with Lands' End purchase
Jun 1, 2002 12:00 PM, Joel Groover
Sears plans to boost its apparel business by acquiring Dodgeville, Wisc.-based Lands' End, the specialty apparel retailer known for its catalogue and Internet sales. The $1.9 billion all-cash transaction, expected to close this month, will enable Sears to sell Lands' End apparel in its 870 full-line stores.
“The transaction could bring a breath of fresh air to Sears' apparel operations,” notes Filippe Goossens, an analyst with Credit Suisse First Boston, in a written report on the deal.
Sears recently rolled out its own family apparel line called Covington, but Goossens believes the Lands' End deal should give Sears' apparel business a bigger boost.
Merrill Lynch analysts Daniel Barry and David Lichtman note that the deal could give Sears the strong brand-name recognition in its apparel business that it now enjoys with its hardline brands Diehard, Kenmore and Craftsman.
They say key Lands' End items will appear in Sears stores by the 2002 holiday season with a full rollout into 15-20% of existing apparel space by fall 2003.
Sears announced it will carry an assortment of Lands' End apparel for men, women and children and a selection of footwear, accessories and home fashions. Lands' End, which will gain access to a much broader customer base, will continue to sell goods through its catalogue and online channels.
Lands' End is among the country's largest specialty apparel Internet and catalogue companies, with annual 2001 revenue of about $1.6 billion. The company currently operates 18 bricks-and-mortar outlet stores as well.
Sears says it will finance the deal through up to $1.6 billion of asset-backed long-term financing.
