HOFFMAN ESTATES, Ill. (Oct. 29, 2013) — Sears Holdings Corp. is evaluating divesting its Sears Auto Center and Lands' End businesses as part of a strategy to "improve our financial flexibility and accelerate our transformation into a leading 'integrated retailer.'"
Sears Holdings' statement on the auto center business was contained in a management update to shareholders released early today.
Regarding the possible divestiture of the auto center business, Sears said, "…we seek to accelerate our transformation by becoming a more focused company that is easier to understand and to manage not just from the standpoint of our store portfolio but also from the standpoint of our portfolio of businesses.
"We believe separating the management of these two businesses from Sears Holdings would allow them to pursue their own strategic opportunities, optimize their capital structures, attract talent and allocate capital in a more focused manner while bringing our business unit structure to life outside of the Sears Holdings portfolio."
Sears said its auto center business "has a unique national footprint that can be leveraged to create significant value. We have begun the repositioning of the business around non-tire related services as tire margins have been compressed industrywide over the past several years, leveraging the store footprint, the number of service bays and our auto technicians.
The statement said Sears is "in the process of evaluating strategic alternatives for the business to maximize its value for our shareholders."
Sears operates nearly 760 Sears Auto Centers across the country, according to its financial filings, including 714 integrated into its full-line stores, eight operating out of Sears Essentials/Grand stores and 36 free-standing locations.
The company does not break out sales or earnings for its business units. Tire BusinessI estimates the business generates sales of at least $1.5 billion.
Sears, under the direction of former Michelin North America Inc. executive Joe Finney, started revamping its store network a year ago and continued this year to refresh the showrooms to give them a cleaner, more open appearance.