Sears Holdings is testing Lands’ End shops within its department stores – part of a plan to make the brand a bigger part of its apparel offerings – say two people familiar with the strategy.
Questions about the fate of Lands’ End have dogged the brand ever since parent Sears, Roebuck & Co. was acquired in March by Kmart Corp. to form Sears Holdings.
Despite official assurances by Sears Chairman Edward Lampert that Lands’ End was not for sale, rumors to the contrary continued to swirl.
Lands’ End’s spotty performance since Sears acquired it in June 2002 did little to quiet critics who said the brands were ill-matched. Further confusing matters, Lampert and his team at Sears have remained tight-lipped about their plans.
“Eddie wants the Lands’ End brand put into Sears stores in a significant way,” said one person familiar with his thinking. “And he wants to remove any obstacles to making this happen.”
One obstacle, according to this source, was Mindy Meads, former chief executive of Lands’ End who left the company in August.
“We don’t comment on personnel situations,” said Jackie Schutty, a Lands’ End spokeswoman. Meads was not immediately available.
On Wednesday, Sears named David McCreight, another Lands’ End executive who had been acting as Meads’ temporary replacement, to permanently succeed her.
Sears has already begun addressing some of the problems that have plagued Lands’ End. One step was a test of shops within its department stores that bring men’s, women’s and children’s merchandise together, better showcasing the brand.
In the past, Lands’ End merchandise had been sprinkled throughout the store, leading to confusion among shoppers.
“We’re making it easier for our customers to shop for Lands’ End by making the brand more visible in our stores,” Schutty said.
Though she declined to say whether the test shops – in Oak Brook, Ill., Paramus, N.J., and Yonkers and Hicksville, N.Y. – would be expanded to other stores, Schutty added that initial response from customers has been positive.
Another problem was the issue of markdowns. As a catalogue company, Lands’ End could avoid the cycle of markdowns that have become integral to department store retailing. The company’s executives initially pushed for adopting a “no markdown” policy on merchandise sold in Sears stores, afraid that discounts would cheapen the brand.
But this strategy backfired when Lands’ End merchandise failed to sell at full price, leaving Sears sitting on piles of inventory, sources said.
Sears has begun taking markdowns to clear unsold goods, said Bill Dreher, an analyst with Deutsche Bank.
Whether Sears can convince shoppers to pay up for Lands’ End products, which can cost twice as much as its other apparel brands, remains to be seen.
Nevertheless, some observers said Lands’ End could give the softer side of Sears a much needed boost if it is marketed and merchandised properly.
They point out that one of every two Americans owns a Kenmore appliance that they bought at Sears. Yet, only 17 percent of the people who buy hard goods at the retailer shop there for apparel.
“The man who goes to Sears to buy a set of Craftsman tools,” said one source, “should also be buying a Lands’ End sports shirt there.”
Corner kickoff
Sears may take the Lands’ End clothier beyond corner displays to shops within its nationwide department stores.
Lands’ End up close
Stores
17 in 2004
Annual sales
About $1.6B since 2002
Cutbacks
Slashed 375 jobs last June