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Sears Should Sell Lands’ End

10/25/2012

The word on the street is that Sears Holding Co. is shopping Lands’ End around. Sears, desperate for cash, is hoping to get $2 billion for Lands’ End.

But why would anyone buy it?

 The bizarre marriage made no sense when Sears bought Lands’ End in 2002 for $1.86 billion. The fact that Sears wants to sell it a decade later for about the same price — and bankers think the actual price will be far less — shows how little Sears brought to the brand.

Lands’ End grew fast in the 1990s as a respected brand of high-quality, classically American clothes. The company led the catalog retail format with creativity and efficiency. Former Sears CEO Alan Lacy took a big gamble on Lands’ End, hoping its clothes could play a key part in the company’s turnaround.

Unfortunately, Sears had no idea on how to leverage the Lands’ End brand to benefit its own brand. Sears tried to sprinkle Lands’ End items around its otherwise forgettable collection of clothing. Paul Miller at Retail Online Integration described it as the new “Lands’ End ghetto” in Sears’ stores.

The question facing any potential buyer is – can the Lands’ End brand be saved?

In a word – possibly. Lands’ End has a number of challenges…not the least of which include quality erosion, lack of brand awareness and 10 years of cultural infection from its owner. Additionally Lands’ End has a massive facility in Southwest Wisconsin – in the middle of nowhere. Geographically it is not efficient for shipping and location has been detrimental in hiring top-tier talent.

Given the state of the Lands’ End brand, the difficult economy and the retail shift to digital an investor with $1.5 billion to spend might be better off starting from scratch.

But I believe Lands’ End could be revived. The simple fact that Lands’ End has none of the real estate liabilities dogging other struggling retailers like Best Buy is notable. More importantly the core principles of Lands’ End are easily translated to today’s economy and consumer. Quality, value, customer service – each just as valid today as 15 years ago.

This is one merchant that would not like to see Lands’ End end.

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