Business Digest: Sears to spin off Lands’ End, last-minute bid to block airline merger fails

December 6, 2013
RETAIL
Sears will spin off its Lands’ End unit

Sears Holdings said Friday that it will spin off its Lands’ End clothing business as a separate company by distributing stock to Sears shareholders.

It’s the latest move by the struggling retailer to turn around its results as it faces wider losses and increasingly displeased investors.

Sears had said in October that it was considering separating the Lands’ End and Sears Auto Center businesses from the rest of the company. It did not mention Sears Auto Center in Friday’s announcement.

Belus Capital Advisors analyst Brian Sozzi said the move shows Sears was unable to get a buyer at the right price for Lands’ End and may raise questions about how much other well-known brand names Sears owns, such as Craftsman, are worth. “It makes you question the value of what Sears is sitting on,” he said.

Edward Lampert, Sears’s chairman and chief executive, disclosed recently that his stake in the company has been reduced to less than 50 percent as investors pulled money out of his hedge fund.

Sears continues to face losses. Last month, it reported a wider third-quarter loss as revenue declined 7 percent, to $8.27 billion. The company heavily marked down goods to move merchandise in the quarter.

Lands’ End, which sells clothing and home goods on the Internet and through catalogues, began in 1963 as a sailboat
hardware- and-equipment catalogue but morphed into a clothing company by 1977. Sears bought the company in 2002.

— Associated Press

AIRLINES
Bid to block merger of AMR, US Air fails

A federal judge on Friday rejected a last-ditch effort by consumers and travel agents to stop American Airlines and US Airways from merging next week, a move some fear would drive ­prices up and service down and make planes more crowded.

The combination of American’s parent AMR Corp. and US Airways Group would create the world’s largest carrier.

Last month, the companies resolved the Justice Department’s antitrust concerns. That settlement requires the airlines to shed some landing slots and gates at several airports, including in New York and Washington. The settlement was approved last week by the bankruptcy judge overseeing AMR’s Chapter 11 case.

AMR has said it hopes to complete the merger Monday.

In their appeal in the U.S. District Court in Manhattan, plaintiffs led by California resident Carolyn Fjord urged that the bankruptcy court’s order be put on hold, saying they would face irreparable harm if the “anti-
competitive” merger went forward.

The consumers and travel agents said combining the carriers could result in fewer flights and available seats, higher fares, poorer service and lower competition, and would be hard to undo once completed.

At a hearing Friday, Chief Judge Loretta Preska of the U.S. District Court in Manhattan said the plaintiffs had failed to show irreparable harm.

— Reuters

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