Sears, Roebuck and Co., Middle America's department store, yesterday agreed to buy Lands' End Inc., the country's largest catalogue and online clothing retailer. For $1.9 billion in cash, Sears is getting what it has failed to create on its own: apparel that appeals to affluent customers.
With the Lands' End purchase, Sears is essentially turning a well-known brand name into a Sears house brand. The Lands' End clothing will join Sears's well-established Craftsman tools and its well-regarded Kenmore major appliances.
Well-heeled shoppers have long been attracted to Sears tools and appliances, but not to its clothing. As early as this fall Sears will devote about 15 percent to 20 percent of its floor space to Lands' End parkas and T-shirts, completing the rollout to its 870 stores by2003.
In return, Lands' End, which was founded in 1963 as a catalogue for sailboat racers and grew into a $1.6 billion-a-year seller of khakis and swimsuits, gets a physical presence on the retail scene. It also gets what many analysts describe as a great price. Sears plans to acquire all Lands' End stock at $62 a share, a 22 percent premium to Friday's closing price of $51.02.
The financial community cheered the proposed union, boosting the stock of both companies yesterday. Sears stock closed at$52 per share, up 19 cents. Lands' End got an even bigger bump, closing at$61.73 per share, up $10.71.
Yesterday some Lands' End devotees were unenthusiastic about seeing their revered brand meld into the more downscale Sears family.
"I'm disappointed," said Gina Warsaw, who owns a restaurant in the District. "I hate to bad-mouth Sears. But if I went into Sears and saw Lands' End, I would think it's not top-quality. I would think less of the Lands' End clothing."
And if Sears is looking to attract the young, hip set by touting the Lands' End brand, at least one 20-year-old says forget it.
"It wouldn't make sense to go to Sears if I can just go online to buy Lands' End," said Julie Morse, a student at Duke University. "I don't think it would draw me to the store." Lands' End has had an online site since 1995.
Sears, based in Hoffman Estates, Ill., hopes to prove the naysayers wrong. Lands' End is only one part of a larger turnaround plan initiated in October by Alan J. Lacy, the company's chief executive.