Sears Holdings Corp (NASDAQ:SHLD) announced Tuesday that it plans to spin off its Lands’ End and Sears Auto Center operations. It will help the company better focus on its core Sears and Kmart stores. The stock jumped more than 10% to $61.16 following the announcement. The struggling retailer said in a statement that separating these two businesses from the rest of the company will encourage them to pursue their own opportunities, attract talent and optimize their capital structures.
Sears’ Q3 sales down 3.7%
However, Sears Holdings Corp (NASDAQ:SHLD) said it will not separate Lands’ End through a sale. Instead, the business will be separated through a transaction that allows existing shareholders to reap the long-term benefits from an increase in its value. The company is evaluating strategic alternatives for the Sears Auto Center business.
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Hedge fund manager Eddie Lampert is the largest shareholder of Sears Holdings Corp (NASDAQ:SHLD). Lampert has been trying to revive the company for the past several years. The Hoffman Estates, Illinois-based company said that it will continue to evaluate its stores, and whether to renew leased locations when they expire.
During the announcement, Sears Holdings Corp (NASDAQ:SHLD) also provided an update on its Q3 results. The company said its same-store sales plunged 3.7% for the quarter ending October 26. The Kmart stores witnessed a 2.6% decline in sales, while sales at domestic Sears stores were down 4.8%. Last month, the company raised $1 billion in incremental term loans.
Sears Canada sells five stores
Sears Holdings Corp (NASDAQ:SHLD)’s Canadian unit announced today that it would sell five of its store leases in the country to Cadillac Fairview Corporation in a C$400 million ($383 million) deal. That includes the flagship downtown Toronto store that has become a “must-see” tourist destination in Toronto. Three of the stores will be vacated in February 2014, and the remaining two in February 2015. Sears Canada Inc. said it employed 956 workers at the five stores. Many of them will be relocated to other stores, while some may lose their jobs.
Sears Holdings Corp (NASDAQ:SHLD) shares were up 6.71% to $59.29 at 10:36 AM EDT.