Any assessment of Mr. Lampert's record as a value creator at Hoffman Estates-based Sears should include the stock performance of these companies. So how did they do? Not so hot. Only one stock has gained value since separating from Sears, while three others have posted double-digit declines. That final spinoff? It went bust.
The big winner is Seritage, which was spun off last July in a distribution of rights to buy into the REIT at $29.58 per share. Seritage stock was recently trading above $52 per share, a 77 percent leap that handily beat a meager 0.3 percent rise in the S&P over Seritage's lifetime. Seritage used proceeds of the rights offering, along with some borrowing, to acquire 266 stores from Sears. The company's strategy is based on reclaiming mall anchor space from Sears and breaking it up into smaller spaces that can be leased at higher rates to other retailers.
Down, down, down and out
The upside is less clear for Lands' End, spun off by Sears in April 2014. Like many midrange retailers, Lands' End is looking for its place in an industry upended by online competition and shifting consumer tastes. The clothing company lost $19.5 million last year — due to a writedown of its brand name — as revenue fell 8.7 percent to $1.4 billion. Lands' End shares have slid 33.8 percent since the spinoff, compared with an 11.3 percent increase for the S&P 500.
Sears investors who exercised their rights to acquire stock in Sears Hometown have suffered even more. Battered by big chains such as Lowe's and Home Depot, Sears Hometown lost $27.3 million on $2.3 billion in sales last year. At $6.57 recently, the stock was trading 56 percent below the $15 exercise price of rights issued to Sears shareholders when Mr. Lampert cut the retailer loose. The S&P 500 has climbed nearly 50 percent since the September 2012 spinoff.
Department store chain Sears Canada — ejected in two tranches in 2012 and 2014 — has done worse. Shares are down 69.1 percent since the November 2012 spinoff, and trade 62.6 percent below the $9.50 exercise price of rights issued in October 2014. The broader market is up 50 percent since November 2012 and 10.8 percent since October 2014.
Worst of all is Orchard Supply, which went bankrupt just 18 months after it was spun off from Sears in December 2011.
The total value of all these transactions to various shareholders depends on several variables, including when they bought into Sears, how many Sears shares they owned at the time of each spinoff, whether they exercised all subscription rights and how many shares of each company they still hold.
But one thing is clear: Investors who stuck with Sears throughout Mr. Lampert's tenure would have done better with an S&P 500 Index Fund.
Columnist Joe Cahill wrote this blog for Crain's Chicago Business magazine, a sister publication of Tire Business.