Sears’ Hometown and Outlet Locations a Boon for Lampert

by InvestorPlace Staff | May 1, 2012 12:09 pm

Sears 3 300x199 Sears' Hometown and Outlet Locations a Boon for LampertEdward Lampert’s ESL Investments Inc. hedge fund, owner of 62% of Sears (NYSE:SHLD[1]), will get an opportunity to buy an even larger stake in the new company to be formed through the spinoff of Sears’ Hometown and Outlet stores, according to BloombergBusinessweek[2].

Sears announced in February plans to spin off the fast growing stores to raise $400 million to $500 million, part of the overall restructuring of the Sears chain.

Lampert, who is also the Chairman of Sears, will be able to buy all the stock his hedge fund is entitled to, and any additional shares not purchased by any other holders who have a right to invest in the the spinoff.

The spinoff business, which will trade on the Nasdaq under the ticker symbol “SHOS”, will consist of  1,240 smaller stores, including 944 Hometown locations and 96 Sears hardware locations, representing $2.34 billion in sales and $81 million in earnings before interest, taxes, depreciation, and amortization.

A decision on whether or not to fund any portion of the sales price with debt is still on the table.

Sears announced today it expected first-quarter earnings from continuing operations to be between$1.46 to $1.84 a share, which has caused its stock to jump over 15%.

Endnotes:
  1. SHLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=SHLD
  2. according to BloombergBusinessweek: http://www.businessweek.com/news/2012-05-01/sears-spinoff-plan-may-boost-lampert-s-control

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