NEW YORK (TheStreet) -- Sears Holding SHLD said Friday it plans to spin off Lands' End clothing business as the struggling retailer sheds assets amid slumping sales and dwindling cash reserves.
Shares of Hoffman Estates, Ill.-based Sears were rising 0.4% to $50.19 extending the stock's 2013 gain to 21.3% By comparison, the Standard & Poor
The spinout, which is subject to final approval by its board and other conditions, is expected to be tax-free for shareholders. Lands' End, a vendor of casual fashion, accessories and footwear, was founded in 1963 and acquired in 2002 for $1.9 billion.
Lands' End traditionally sold its products through catalogs and eventually online, but after being bought by Sears also had a presence in company stores. The company intends to list its shares on the Nasdaq under the ticker symbol "LE."
The unit generated revenue of $1.6 billion in 2012, according to the registration statement filed with the Securities and Exchange Commission, down from $1.73 billion in sales in 2011. Analysts in October estimated the division was valued at about $1.25 billion, or 7.5 times Ebitda.
Hedge fund manager Edward Lampert, who is chairman and CEO of Sears, telegraphed back in October it was considering separating Lands' End and its Sears Auto Center business. The process was described by many as a gradual liquidation of the once high-flying retailer which has seen quarterly sales declining for more than five years.
Evan Mann, senior high-yield analyst at Gimme Credit LLC, wrote Friday that "we continue to view [Sears] as a struggling retailer in the process of undergoing an orderly liquidation."