May 13, 2002
(Computerworld)
Online and catalog retailer Lands' End Inc. is being acquired by department store retailer Sears, Roebuck and Co. in a deal valued at $1.9 billion.
In an announcement today, the two companies said the transaction will give Lands' End greater marketplace exposure and will help Sears improve its direct-to-customer marketing and clothing lines.
The acquisition of Dodgeville, Wis.-based Lands' End is expected to be finalized next month, according to Hoffman Estates, Ill.-based Sears. Under the agreement, Lands' End will remain in Dodgeville but will become a wholly owned subsidiary of Sears.
In a note to customers posted today on its Web site, Lands' End president and CEO David Dyer announced the sale and reiterated the company's commitment to customer service.
"Management is excited about the potential opportunities for growth as Sears intends to embrace the Lands' End brand," Dyer said in the statement.
Dyer said the sale to Sears gives Lands' End increased markets in which to sell its products. "We were considering the prospect of opening stores ourselves or seeking a strategic partner, and ultimately decided that our alliance with Sears offered the most exciting opportunity."
Under the deal, Sears will introduce a selection of Lands' End men's, women's and children's clothing, as well as shoes and other products, into many of its 870 full-line stores by this fall, with a complete product rollout to stores by fall 2003.
Lands' End will continue to offer its complete product line direct to customers through its catalogs and online.
Alan J. Lacy, Sears' chairman and CEO, said the Lands' End purchase will help his company accelerate the growth of its customer-direct business, which includes catalog, phone and online sales. "We can help accelerate the growth of the Lands' End direct business through Sears' extensive customer relationships," he said in a statement.
Lands' End operates 16 outlet stores in Wisconsin, Illinois, Minnesota and New York, plus three outlet stores in the U.K. and one in Japan. Lands' End launched its Web site in 1995, featuring about 100 products as well as stories, essays and travelogues.
The company has introduced several innovations for shoppers on its Web site, including My Virtual Model, a tool that allows shoppers to create a 3-D model for their body to ensure a better fit for clothing they order. The company also offers the My Personal Shopper service, which allows customers to set up a profile of their wardrobe style preferences so they may receive recommendations from Lands' End.
Lands' End's annual revenue in 2001 was approximately $1.6 billion, while 2001 revenue at Sears was more than $41 billion.
Barrett LaMothe Ladd, a Concord, Mass.-based independent analyst who covers online retail trends, said it's intriguing that Sears, the long-ago leader in catalog direct-to-customer sales, is buying one of today's best-known and best-performing catalog and online businesses.
"To see them go out and get more experience in catalog marketing is clearly ironic," she said. "Obviously, they'll learn a lot from them."
Carol Baroudi, an analyst at Baroudi Group in Arlington, Mass., said Sears could certainly improve itself by incorporating some of the successes at Lands' End, including quality customer service, better branding and high-quality merchandise.
"If they don't dilute the brand and they keep the quality, I think that Sears is going into a good direction," Baroudi said. Sears has outsourced too much in recent years, including customer service and delivery services, causing them to lose ground in the eyes of consumers, she said.
"I really do believe that Lands' End knows more about the catalog business and customer service, which is what the Web has become."
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