Dodgeville, WI—Rumors are swirling that $1.51 billion apparel cataloger Lands’ End may be up for sale. A report in the May 28 issue of “BusinessWeek” magazine quotes an unnamed source as saying that founder/chairman Gary Comer, who controls 55% of the company, has placed Lands’ End on the block. The story also says that Sears, Wal-Mart, and May Department Stores all looked into buying Lands’ End last year. What’s unclear is whether Comer, who could not be reached for comment, has put his portion of the company up for sale or whether he’s acting in concert with the other board members to sell the entire company.
Lands’ End president/CEO David Dyer would only say of the report, “We don’t comment on our organizational structure or any rumors.” Others, however, believe the report could lead to a possible sale. “For the right price, anybody’s up for sale,” observes analyst Ellen Schlossberg, of Chicago-based investment firm William Blair & Co. “But for the past year and a half, Lands’ End has been putting a lot of work into fixing its business–improving merchandising and merchandise presentation, creating a more-efficient sourcing structure, and trying to figure out what circulation strategy works. That lends to perhaps why it would be put up for sale.”
Craig Battle, managing director of Princeton, NJ-based investment bank Tucker Alexander, says that if Comer, 72, is indeed looking to sell the company, “it may be for lifestyle reasons.”
On the other hand, Battle questions why Lands’ End would be sold “in a marketplace that hasn’t rewarded catalogers with any kind of reasonable multiples unless there are extraordinary circumstances.” Still, “there are not many companies out there who could buy a Lands’ End,” he says. “So if a Wal-Mart or a Sears says, ‘We’re interested,’ you have to listen.” The cataloger, which does not have a retail presence, “is a retail opportunity waiting to happen,” Battle adds.
Another possible reason for putting Lands’ End on the market, Schlossberg conjectures, is that the company may have plateaued in terms of revenue growth. “There’s only so much you can do with the same focus and same merchandise,” she notes.
In other Lands’ End news, the company announced during its analysts meeting in New York on May 17 that it plans to spin off a large-size women’s catalog this October, having successfully tested a large-size women’s clothing line over the past few months. In addition, it plans to expand its intimate apparel business within its core books. “Those are both good ideas that should bring incremental revenue,” Schlossberg observes, “but not necessarily huge opportunities to get the company to the next plateau.”