May 14, 2002 By Dave Carpenter Ap Business Writer 3 min read

CHICAGO (AP) – Sears, Roebuck and Co. is buying catalog retailer Lands’ End Inc. for about $1.9 billion in an effort to revive its long-struggling clothing business, the companies announced Monday. The announcement sent Lands’ End shares up more than 20 percent.

Sears’ shares also rose slightly as retail analysts hailed the acquisition as a sound move.

Lands’ End, whose reputation for higher quality clothing attracts more upscale buyers than Sears, is the nation’s largest specialty apparel catalog company and biggest Internet seller of apparel.

Under the deal expected to be completed in June, it will become a wholly owned subsidiary of Sears, but will keep its headquarters in Dodgeville, Wis.

“This transaction brings together two of the great names in American retailing, and in the process strengthens both companies and brands,” said Alan Lacy, Sears chairman and chief executive.

“Needless to say it’s a lot of money, but … strategically it takes us another step on the journey of our turnaround at Sears,” Lacy told analysts in a conference call.

Sears, one of the biggest U.S. retailers, is overhauling its 870 full-line stores after years of lackluster apparel sales.

With discount chains such as Kohl’s and Target having taken away some of its business in recent years, Sears is easing away from its traditional department-store model and adding more discounting and self-service, and increasing its emphasis on home appliances, a longtime strength.

Sears, based in suburban Hoffman Estates, will introduce a selection of Lands’ End products into many of its stores by this fall and is expected to complete product rollout to stores by fall 2003.

The acquisition of Lands’ End is a “brilliant strategic move,” said retail analyst Bernard Sosnick of Fahnestock and Co.

Lands’ End – with $1.6 billion in revenue in 2001 – will continue to offer its complete product line through its own catalogs and online at www.landsend.com. Lands’ End executives said there are no immediate plans to add Sears home appliances to their catalog.

David Dyer, Lands’ End’s chief executive and president, will remain in charge of the business, and also will assume responsibility for Sears’ customer-direct business, which includes sears.com, catalogs and specialty merchandise.

Sears will make a tender offer of $62 a share in cash for all of Lands’ End stock. That is a 21.5 percent premium over Friday’s closing price of $51.02 a share on the New York Stock Exchange.

In Monday morning trading, Sears shares rose 29 cents to $52.10 and Lands’ End rose $10.71, or 21 percent, to $61.73.

Lacy said the transaction – which has approval of both companies’ boards of directors – does not alter Sears outlook of a 17 percent earnings increase for the year.

Lands’ End’s founder and chairman, Gary C. Comer, and other shareholders have agreed to tender shares representing about 55 percent of the outstanding common stock. Forbes magazine estimated Comer’s wealth in March at $1 billion.

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On the Net:

Sears: http://www.sears.com/

Lands’ End: http://www.landsend.com/