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Sears Holdings Corp. (SHLD - Analyst Report) moved a step ahead with its previously announced strategic measures by initiating the filing process for its proposed Lands’ End spin off. In the first move, Lands’ End Inc. registered the spin off with the Securities and Exchange Commission filing a statement on Form-10.

Per the filing, Sears will spin-off the Lands’ End business by distributing all the common stock of Lands’ End Inc. on a pro rata basis. The company highlighted that the spin-off transaction will enforce no tax implications on the U.S. shareholders apart from any cash received for the fractional shares. Moreover, the transaction requires no action on the shareholders’ part to participate in the spin off.

The completion of the spin off is currently contingent upon the receipt of approval from Sears’ board and the fulfillment of certain basic conditions.

Sears Holdings has long been grappling with weak top-line performance and even weaker bottom-line results. In an effort to enhance liquidity and improve operating performance, the company has resorted to strategies that focus on reducing investment in sections of the company that no longer contribute significantly to its growth.

In doing so, Sears Canada Inc. – a unit of the cash-strapped broadline retailer – terminated leases at five of its stores, including 4 stores in Ontario and 1 store in British Columbia. The transaction fetched Sears about C$400 million. In total, these stores employed 965 people.

Additionally, as part of its transformation plans, the company is expected to spin off its Sears Auto Center business. The separation will provide additional liquidity while help focus on its core business.

Notably, Sears Holdings is focusing on cost containment, inventory management and merchandise initiatives to elevate margins. We commend the company’s strategy of capitalizing on opportunities, while increasing profitability through its revamped organizational structure and new operating model. All these measures are expected to drive top and bottom-line growth.

Other Stocks to Consider

Sears Holdings currently has a Zacks Rank #4 (Sell). Better-performing stocks in the retail space include G-III Apparel Group Ltd. (GIII - Snapshot Report), PriceSmart Inc. (PSMT - Snapshot Report) and The TJX Companies Inc. (TJX - Analyst Report). Of these, G-III has a Zacks Rank #1 (Strong Buy), while PriceSmart and TJX Companies carry a Zacks Rank #2 (Buy).

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