Sears Plans to Separate Lands' End From Company

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Oct. 29 (Bloomberg) -- Imperial Capital Managing Director Mary Ross-Gilbert discusses Sears plans to separate Lands' End and its Auto Centers for the rest of the company on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Mary ross berger who recommend sears as an underperform and has the lowest price target on the street.

A pessimistic $19 a share.

Tell us what you understand about this transaction.

Would this be a spinoff and would it help sears?

Is that why we are seeing it rally right now?

I think the way the stock act may be separate from fundamentally what is going on here.

In terms of the news today, this is something we have been expecting for some time, that is they are evaluating the separation of lands end, a spinoff of lands end to shareholders just like we saw one year ago with sears hometown and out let in which they spun off that business.

That could be attractive to shareholders on in terms of the current share price but in terms of what the rights offering price might be.

If you look at sears hometown, the rights offering price was $15 a share.

Those shares today traded nearly twice that amount and at its peak earlier this year, it was close to $60 a share.

So what could lands end be worth if it was spun off?

We are valuing lands end at about $1.7 billion.

That's fairly close to what they paid for it back in 1999. however, there is no financial information available on lands end, so we are estimating the business has grown and that this year, they would generate around $2.5 billion in revenue and round $200 million in ebit off -- in he bit -- if those numbers are right, and it might be high.

When you have the lowest price target out there and you are calling it an underperform, is that a cell?

Absolutely.

This stock has held 75% by two shareholders.

The largest shareholder is esl.

If that's the largest shareholder, what does it mean for those who are not involved?

The largest shareholder is the one controlling the company.

That is right.

But this is a very complex company and there are a lot of disparate access.

We saw that in the numbers they reported.

They are going to report ebit da of negative 300 million.

If you strip out lands end and the sears auto center business, those losses would be much higher.

They don't did that for actual pension funding which is larger than the actual pension expense.

What is the strategy here?

Why is eddie lampert divesting the crown jewels of his business?

What's going to be left to do?

The shareholders benefit because in the case of lands end, it is going to likely be spun off to the shareholders so they will get to buy in at a low valuation and then as a publicly traded stock, command a higher valuation and as a separate business, you can have the right capital to allocate and focus and grow the business appropriately.

Those brands are commanding some attractive lu asians.

We think that is a -- attractive to shareholders.

She has the lowest price

This text has been automatically generated. It may not be 100% accurate.

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