Sears to spin off Hometown, Outlet and some hardware stores
Steve’s breakdown: I don’t pretend to know what this means stock-wise but the spin-off is going to need some fresh marketing to make this work.
HOFFMAN ESTATES, IL: Shares of Sears Holding Corp. shot up more than 5 percent in early trading on Monday on documents the Hoffman Estates-based retailer filed with the Securities and Exchange Commission detailing its plans to spinoff its hardware and outlet stores.
The retailer announced plans of the spinoff in April.
The news sent the company’s stock up to $54 in premarket trading Monday. It was holding a 3 percent gain, at $53.15, midmorning.
Sears had signaled that it would split the companies back in February. There are a total of 1,238 Hometown, Outlet and hardware stores as of April 28, according to Sears, which is trying to turn around its business and spruce up its image. It has already closed five Hometown stores, eight hardware stores and one Outlet store.
Sears, which also owns Kmart, has looked at spinoffs and real estate sales to restore profitability and boost shareholder confidence. Aside from the separation of the Hometown, Outlet and some hardware stores, the company announced in May that it would spin off a stake in its Canada division.
Sears did not disclose Monday in the filing with the Securities and Exchange Commission how much money it expects to raise with the spin-off of the Hometown, Outlet and hardware stores. It previously said that it expected the deal to raise between $400 million and $500 million.
Sears Chairman Edward Lampert’s ESL Investments Inc. will own a majority stake in the business being spun off.
For fiscal 2011, the combined Sears Hometown, hardware and Outlet businesses had net income of $33.1 million on sales of about $2.34 billion. That compares with fiscal 2010 net income of $49.8 million on sales of approximately $2.35 billion.
Sears Holdings Corp., based in Hoffman Estates, Ill., is set to report its second-quarter earnings Thursday.
The new company will be listed on the Nasdaq under the “SHOS” ticker symbol.