Tags: Sears | Buys | Lands' | End | for | $1.9 | Billion

Sears Buys Lands' End for $1.9 Billion

Monday, 13 May 2002 12:00 AM

The acquisition, subject to regulatory approval, was expected to close in late June. At that time, Lands' End will become a wholly owned subsidiary of Sears but will continue to be headquartered in Dodgeville, Wis.

"Lands' End and Covington, Sears' new proprietary classic apparel line launching this fall, will be the foundation of the company's proprietary apparel offerings," said Alan J. Lacy, Sears chairman and chief executive officer. "It is an excellent fit for Sears and our customers, and will aid us in becoming the preferred shopping destination for families."

Shares of Lands' End gained $10.71, or 20.99 percent, to close at $61.73 on volume of 2.9 million, while Sears shares gained 19 cents, or 0.37 percent, to close at $52 on heavy volume of 2.8 million shares.

Both companies are listed on the New York Stock Exchange. The cash transaction represents a 22 percent premium at $62 a share over Friday's close.

"We were considering the prospect of opening stores ourselves or seeking a strategic partner, and ultimately decided that our alliance with Sears offered the most exciting opportunity," said David F. Dyer, president and chief executive officer of Lands' End.

Sears said Gary C. Comer, founder and chairman, and certain other Lands' End shareholders agreed to tender their shares, approximately 55 percent of the outstanding common stock.

The offer requires that at least two-thirds of the fully diluted shares be tendered.

Sears, which released its first catalog in 1888, said it would introduce a selection of Lands' End products into many of its 870 stores by fall 2002 and is expected to complete product rollout to stores by fall 2003.

Sears said its stores would carry an assortment of Lands' End men's, women's and children's apparel, as well as a selection of footwear, accessories and home fashions.

Lands' End will continue to offer its complete product line direct to customers through its catalogs and online.

Lacy said the opportunity to be the exclusive retail distributor of Lands' End merchandise was significant to the Sears' overall apparel strategy. It further differentiates Sears as a destination for nationally recognized brands, improves its apparel offering and accelerates growth of its customer-direct business.

"Lands' End is a very successful and well-managed company," he said. "We were drawn to Lands' End's brand strength across all apparel categories, including men's, women's and children's. We can help accelerate the growth of the Lands' End direct business through Sears' extensive customer relationships."

Lacy explained that the deal did not alter Sears’ outlook for the year. The transaction is expected to be slightly dilutive to break-even in 2002 and 2003 and significantly accretive in 2004.

"Considering the minimal impact to 2002 earnings, we continue to expect 2002 full-year comparable earnings per share, including Lands' End, to increase approximately 17 percent from the prior year amount of $4.22," Lacy said.

Sears said it did not expect to record a special charge for the Lands' End transaction.

Copyright 2002 by United Press International.

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The acquisition, subject to regulatory approval, was expected to close in late June. At that time, Lands' End will become a wholly owned subsidiary of Sears but will continue to be headquartered in Dodgeville, Wis. Lands' End and Covington, Sears' new proprietary classic...
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2002-00-13
Monday, 13 May 2002 12:00 AM
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