Sears is spinning off one of its most profitable clothing lines, Lands' End, hoping the move will bring much needed cash to the failing department store.
Over the last few years Sears, which also runs Kmart, has been selling or spinning off its assets in the face of declining sales, FashionMag.com reported. Sears has spun off, or divided shares among Sears shareholders, its Orchard Supply Hardware Stores business in 2011. The company did the same for its Sears Hometown and Outlet branch last year, FashionMag.com reported.
Sears also sold off more than a dozen of its most lucrative stores in the past two years, raising over $250 million in needed cash, MSN Money reported.
Tough times for the company reportedly began the day Lampert merged Sears and Kmart in 2005. Shares dropped 57 percent that day, Bloomberg reported. Sears' sales have also slowly declined, falling from $41.57 million to $39.85 billion, FashionMag.com reported.
Lands' End has remained one of Sears' most profitable businesses, with a net income of $49.8 billion. Robert Lampert, Sears' CEO and biggest shareholder, is reportedly spinning off Lands' End to raise capital for Sears.
But critics aren't convinced the move will work, and according to Bloomberg, Lampert did not invest enough money into Sears stores to make it successful. In 2012, Sears spent around $1.51 per square foot for its stores, compared to the $6.25 Macy's spent, Bloomberg reported.
Lands' End, founded half a century ago, sells laid-back clothing, shoes and accessories. Sears purchased Lands' End in 2002. The company originally considered selling the clothing line, but opted to spin it off instead.
"His investors are running out of patience," Erik Gordon, a professor at the University of Michigan's Ross School of Business, told Bloomberg. "He's running out of time to keep pulling rabbits out of his hat."
