- The Washington Times - Tuesday, May 14, 2002

Sears, Roebuck and Co., once a thriving retail mail-order business, plans to return to its roots with the acquisition of catalog giant Lands' End Inc.
The fourth-largest U.S. retailer said yesterday it would buy the nation's largest catalog and Internet specialty clothing retailer for $1.9 billion in an effort to revive its struggling clothing division and attract new customers.
"We are drawn to Lands' End's brand strength across all apparel categories, including men's, women's and children's," said Alan J. Lacy, Sears chairman and chief executive. "It is an excellent fit for Sears and our customers and will aid us in becoming a preferred shopping destination for families."
Lands' End, which has existed since 1963, is known for its conservative style of clothes like khakis, polo shirts and button-down shirts, as well as soft luggage and monogrammed merchandise.
Sears, based in Hoffman Estates, Ill., will be the exclusive retail distributor of the Lands' End brand and will begin offering some of it this fall at its 870 stores, including the 38 stores in Maryland and Virginia. By fall 2003, a full line of Lands' End merchandise will be available at Sears.
"To have tremendous growth, we needed this retail channel," David F. Dyer, president and chief executive of Lands' End, said at a press conference yesterday.
Bernard Sosnick, a retail analyst for Fahnestock & Co., said the move bridges the gap between shoppers who buy appliances from Sears, but tend to shy away from Sears' clothing. Adding Lands' End to its product mix should bring in more affluent customers.
"There are some challenges to make this thing work extremely well," said Chris Merritt, a principal at Kurt Salmon Associates in Atlanta. "The typical Lands' End customer is not necessarily the typical Sears customer."
Upon completion of the deal expected next month, Lands' End will become a wholly owned subsidiary of Sears. Mr. Dyer will continue to run Lands' End and will add the responsibility of Sears' customer-direct business, which includes Sears.com and its catalogs. Sears currently does not offer clothing on its Web site, but will have a link to Landsend.com, while Lands' End will have a link to Sears' Web site.
"In Lands' End, Sears has acquired one of the best-run direct-to-consumer companies in the country, with regards to customer service, brand strength and operations," said Ken Cassar, senior analyst with Jupiter Research. "What is really exciting about this acquisition is the ability that Sears now has to sell Lands' End merchandise in its stores.
"Lands' End gains access to a $40-billion-per-year distribution channel, while Sears picks up what may become the strongest private label apparel brand in department-store retailing."
Dodgeville, Wis.-based Lands' End, which distributed 269 million catalogs in fiscal 2001, had been considering opening its own stores. The cataloger has 16 outlet stores in four states and in England and does not plan to close them, Mr. Dyer said.
Sears began as a mail-order business in 1888, selling only jewelry and watches. It didn't open its first store until 1925, in Chicago.
In recent years, Sears has focused on its appliances and on its line of Craftsman tools and has been overhauling its clothing unit. Sears recently announced a new clothing brand called Covington, which will still exist, but Mr. Lacy said the Lands' End brand will be the company's top apparel name.
The department store chain reported sales of $41 billion last year, while Lands' End had $1.57 billion in revenue.
Both companies' shares trade on the New York Stock Exchange. Sears' stock closed at $52 yesterday an increase of 19 cents from Friday. Lands' End shares closed at $61.73 $10.71 more than Friday's close.
This article is based partly on wire-service reports.

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