Sears boss Eddie Lampert is shopping the retailer’s underperforming khaki-andplaid Lands’ End brand, which he bought for just under $2B a decade ago. (AP)
Eddie Lampert is cleaning out the closet at Sears, and he’s not feeling sentimental about Lands’ End.
The number-crunching hedge-fund tycoon — who, as chairman of Sears Holdings, has lately been scrambling to raise cash amid heavy losses at the Sears and Kmart retail chains — has quietly been shopping the Dodgeville Wis. mail-order catalog to potential buyers, The Post has learned.
Lampert, who inherited Lands’ End when he took control of Sears in 2005 by merging it with Kmart, has approached a handful of private-equity firms as he looks to raise as much as $2 billion in cash, sources said.
While it’s early in the process, sources said that Lampert is likely to tap Goldman Sachs to run the sale.
Last month, Sears said it had moved to raise upwards of $750 million by selling 11 stores and spinning off some smaller-format stores as it disclosed it lost $3.1 billion last year.
Sears has since cut a deal to sell three prize stores in Canada for $170 million.
“Everybody is talking to Sears about buying back stores,” according to a real-estate source. “It stinks of desperation.”
A Sears spokeswoman yesterday said the retailer doesn’t “comment on rumor or speculation.”
Lampert is looking to find a buyer who will license Lands’ End to Sears while pursuing growth elsewhere, possibly in Europe, according to a source.
“The idea is that Lands’ End would become something like Tommy Hilfiger,” according to the source, noting that the global brand’s clothing is licensed exclusively to Macy’s in the US.
Nevertheless, many insiders question whether the hard-bargaining billionaire could fully recover the $1.86 billion shelled out in 2002 by former Sears CEO Alan Lacy — a price tag that was widely viewed as inflated at the time.
That’s because Lands’ End — which had seen torrid growth in the 1990s as a family destination for khakis, cardigans and sensible swimsuits — hasn’t grown much under the Sears umbrella.
Sears has mostly kept mum about the brand’s financial performance in recent years, but sources said its profitability hasn’t changed much either, generating between $150 million and $200 million annually in earnings before interest, taxes, depreciation and amortization, or Ebitda.
While Sears had paid more than 10 times Ebitda for Lands’ End, today’s rocky retail environment makes a deal more likely in the $1.2 billion to $1.6 billion range, bankers said.
Lands’ End’s upscale image was an awkward fit from the beginning for Sears, whose stores have become increasingly shabby as Lampert has slashed capital spending.
While it’s rare for a brand to rebound, Martha Stewart has been successful at Macy’s despite a previous stint at Kmart, notes Michael Stone of the Beanstalk Group, a branding consultant.
“A lot of people remember Lands’ End before it went to Sears,” Stone said. “It can certainly be brought back to its former glory by the right company.”