Commentary

Lands' End May Float On Its Own Again

Anyone who has ever worked at a startup or worn the green eyeshades of a copy editor will appreciate the tale of how Lands’ End got its misplaced apostrophe, as related by Suzanne Kapner in the Wall Street Journal this morning. It seems that the first direct mail piece for the incipient company, which was started by Young & Rubicam copywriter Gary S. Comer in a basement apartment in Chicago in 1963, came back from the printer with the error. With just $30,000 in working capital, he could not afford to correct it.

For the last decade or so, Lands’ End has been trying to correct what has proven to be a vastly costlier mistake to the brand’s value and image — its sale to Sears in 2002 — and yesterday Edward Lampert’s beleaguered holding company announced that it might spin off the label since its efforts to find a buyer have not been successful.

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“We believe that Lands' End is an iconic brand with the potential to become a more global brand, and we presently anticipate that any separation, if pursued, would not be structured as a sale but rather through a transaction that would allow existing shareholders the opportunity to benefit from the significant potential for value creation over the long term,” reads the qualification-laden prose that you might say translates to unlocking shareholder value by untethering the nautical-rich brand from the sinking mothership. 

Preferring a Halloween metaphor, Brian Sozzi, CEO of Belus Capital Advisors, told the New York Times’ David Gelles: “They are a zombie retailer. And with today’s announcement, they are dismembering their body.”

Sozzi has posted photos of desolate, ill-managed, under-staffed and poorly populated Sears stores on his blog, as Gelles points us to in his lede. There’s nary a mention of Land’s End, which Lampert had grand visions for in an interview with Women’s Wear Daily earlier this year, as reported by Retail Wire’s George Anderson. 

“‘I believe the physical representation should be something that matches the online digital presentation,’ Mr. Lampert told WWD‘We have made a large investment to bring that to life. Integrated retail is still not second nature. It's something that we are still refining.’”

Reaching for a survivalist trope, Matt McGinley, a managing director at International Strategy & Investment Group, told Bloomberg’s Lauren Coleman-Lochner: “They’re continuing to burn the furniture to stay warm.”

In other news yesterday, the company said it was also considering a sale of Sears Auto Centers, closing additional outlets, and relayed that it has sold off some store leases in Canada.

“The Hoffman Estates, Ill., company also announced that its third-quarter sales at stores open at least a year fell 3.7%. The figure dropped 4.8% for Sears locations and declined 2.6% for Kmart stores, according to the Associated Press.

In further presumably bad news, Tara Poseley, a fitness and yoga enthusiast who has been president of apparel at Sears Kmart unit, is leaving to become chief product officer at another tarnished brand, Lululemon, the WSJ’s Joann S. Lublin reports.

Sears paid $1.9 billion for Lands’ End in 2002, about $200 million more than it currently would be valued at, Mary Ross-Gilbert, an analyst at Imperial Capital LLC, told Bloomberg’s Coleman-Lochner yesterday.

The WSJ’s Kapner reports that among Lands' End’s major gaffes, “it used Sears's sourcing operations, which resulted in lower quality goods.” And, she writes, “Lands' End employees prided themselves on answering customer service phones in one ring. To keep costs down, Sears reduced the number of service representatives, leading to longer waits.”

But these woes are decisions that predate Lampert’s buyout of Sears and its subsidiaries in 2005, and Edgar Huber, who took over as CEO at Lands' End's two years ago, has trimmed back the number of stores within Sears stores, stopped using its supply chain and has “modernized the brand's looks and product lines, according to a person familiar with the matter,” Kapner continues.

Among Lands’ End early innovations, according to a New York Times obituary of founder Comer by Dennis Hevesi in 2006, was its early use of toll-free numbers for ordering and the creation of the “‘magalog’ — thick with articles as well as photos and captions. In 1988, for example, the company hired a Chicago Tribune reporter to write an account of his train journey home for the Christmas holidays.” 

One wonders which is the more-appealing, if quaint, notion: a home-for-the-holidays train ride or a rejuvenated Lands’ End fending for itself in the marketplace? 

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