Wall Street Journal
 
       
05-14-2002     Sears Agrees to Buy Lands' End In Deal Uniting Bricks, Clicks

U.S. BUSINESS NEWS
By AMY MERRICK
Staff Reporter of THE WALL STREET JOURNAL

Sears, Roebuck & Co., which has struggled for decades to develop its own successful clothing line, has agreed to buy one instead -- the nation's largest mail-order and Internet specialty apparel retailer, Lands' End Inc.

The $1.86 billion cash deal will put Lands' End golf shirts and crewneck sweaters, now almost exclusively shipped by mail, in Sears stores along with the Kenmore appliances and Diehard auto batteries that have been the giant retail chain's trademark products.

The acquisition offers Sears the chance to win over the younger, more upscale Lands' End customers who shop from home, while marking a major return to the catalog business for the legendary mail-order pioneer that ended its "Big Book" after 100 years in 1993.

For Lands' End, it provides a huge nationwide presence in bricks-and-mortar stores that could boost revenues -- while avoiding the risky expansion into running its own stores that has distracted catalog competitors such as J. Crew. The purchase price of $62 a share is a 21% premium over Friday's closing price; about half the shares are owned by Gary C. Comer, its 74-year-old founder and chairman.

But the move carries its own risks, because the loftier image of Lands' End could be damaged by association with the more downscale profile of Sears. "I just hope the quality and customer service at Lands' End don't go down with this Sears acquisition," said Kathy Wendling, a Lands' End customer and school librarian in Dallas.

In an indicator of that concern, while Sears plans heavy promotion of the Lands' End merchandise in newspaper circulars and Sears credit-card mailings, there are no plans to mention Sears in the Lands' End catalog or online, a Lands' End spokeswoman said.

The deal also runs counter to expectations of a few years ago that catalog-and-online upstarts might upend brick-and-mortar retailers. The trend now is to merge the two operations: Just last year, Wal-Mart Stores Inc. and Kmart Corp., which had set up Internet operations as distinct entities, brought the online divisions back under their full control.

 
         
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