Sears Holdings (SHLD) Considers Splitting From Lands' End, Auto Center

NEW YORK (TheStreet) -- Struggling retailer Sears Holdings (SHLD) spiked on the announcement it was contemplating divesting two of its popular portfolio brands in its latest turnaround efforts. The company said it would consider separating clothing retailer Lands' End and auto supplies chain Sears Auto Center from the parent company.

"We believe separating the management of these two businesses from Sears Holdings would allow them to pursue their own strategic opportunities, optimize their capital structures, attract talent, and allocate capital in a more focused manner while bringing our business unit structure to life outside of the Sears Holdings portfolio," the company said in a statement.

Sears said it would not sell Lands' End but rather engage a transaction to ensure existing shareholders could benefit. The company is currently evaluating strategic alternatives for Sears Auto Centers.

Shares jumped 9.2% to $60.70 on Tuesday afternoon, and 1.52 million shares had changed hands compared to the three-month average daily trading volume of 1.06 million.

The Illinois-based company also reported a 3.7% decline in comparable store sales in the 12 weeks to Oct. 26, down 4.8% in Sears-branded stores and 2.6% lower for Kmart. The retailer, which will report third-quarter results on Nov. 11, said it expects a loss of $582 million as sales continue to drop.

TheStreet Ratings team rates Sears Holdings Corp as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate Sears Holdings Corp (SHLD) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."

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