===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(Rule 14d-100)
Tender Offer Statement Under Section 14(d)(1)
or Section 13(e)(1) of the Securities Exchange Act of 1934
-------------------
LANDS' END, INC.
(Name of Subject Company (Issuer))
INLET ACQUISITION CORP.
a wholly owned subsidiary of
SEARS, ROEBUCK AND CO.
(Names of Filing Persons (Offerors))
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
-------------------
515086106
(CUSIP Number of Class of Securities)
Anastasia D. Kelly
Senior Vice President and General Counsel
Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, Illinois 60179
Telephone : (847) 286-2500
(Name, address and telephone number of
person authorized to receive notices
and communications on behalf of filing persons)
With a copy to:
Gary P. Cullen, Esq.
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Telephone: (312) 407-0700
[_] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number or the Form or Schedule and the date of its filing.
Amount Previously Paid: $____________ Filing party: ___________
Form or Registration No.: ____________ Date Filed: ___________
[X] Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[_] issuer tender offer subject to Rule 13e-4.
[_] going-private transaction subject to Rule 13e-3.
[_] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting
the results of the tender offer: [_]
===============================================================================
Item 12. Exhibits
(a)(5)(A) Press Release issued by Sears, Roebuck and Co. on May 13, 2002
(a)(5)(B) Key Messages for Sears Corporate Strategic Leadership Team
(a)(5)(C) Letter to Sears Associates, dated May 13, 2002, from Alan J. Lacy
posted on the Sears Intranet
(a)(5)(D) Slides used in Conference Call held on May 13, 2002
EXHIBIT INDEX
Exhibit Exhibit Name
- ------- ------------
(a)(5)(A) Press Release issued by Sears, Roebuck and Co. on May 13, 2002
(a)(5)(B) Key Messages for Sears Corporate Strategic Leadership Team
(a)(5)(C) Letter to Sears Associates, dated May 13, 2002, from Alan J. Lacy
posted on the Sears Intranet
(a)(5)(D) Slides used in Conference Call held on May 13, 2002
Exhibit (a)(5)(A)
MEDIA CONTACT:
Peggy A. Palter
Sears, Roebuck and Co.
(847) 286-8361
Emily C. Leuthner
Lands' End, Inc.
(608) 935-4985
FOR IMMEDIATE RELEASE
May 13, 2002
SEARS AGREES TO ACQUIRE LANDS' END
FOR $62 PER SHARE, OR $1.9 BILLION IN CASH
Acquisition Strengthens Sears' Apparel Offerings; Expands Lands' End Brand
HOFFMAN ESTATES, Ill. and DODGEVILLE, Wis. - Sears, Roebuck and
Co. (NYSE: S) and Lands' End, Inc. (NYSE: LE), have entered into a
definitive agreement for Sears to acquire the direct merchant in a cash
tender offer for $62 per Lands' End share, or approximately $1.9 billion.
Upon completion of the transaction, expected in June, Lands' End
will become a wholly owned subsidiary of Sears and will continue to be
headquartered in Dodgeville. Lands' End is the largest specialty apparel
catalog company and seller of apparel on the Internet in the U.S.
Sears has agreed to commence a tender offer to acquire all shares
of Lands' End stock. Gary C. Comer, founder and chairman, and certain other
Lands' End shareholders have agreed to tender their shares, representing
approximately 55 percent of the outstanding common stock. The tender offer
requires that at least two-thirds of the fully diluted shares be tendered.
The transaction, which has been approved by both companies' board of
directors, is contingent upon customary closing conditions, including
regulatory and other standard approvals.
Sears will introduce a selection of Lands' End products into many
of its 870 full-line stores by fall 2002 and is expected to complete
product rollout to stores by fall 2003. Sears stores will carry a
compelling assortment of Lands' End men's, women's, and children's apparel,
as well as a selection of footwear, accessories and home fashions.
Lands' End will continue to offer its complete product line direct
to customers through its catalogs and online at landsend.com. The growth
prospects of Lands' End and Sears' customer-direct businesses, which
consist of online and catalog operations, will be enhanced significantly.
Alan J. Lacy, chairman and chief executive officer, said the
opportunity to be the exclusive retail distributor of Lands' End
merchandise is significant to the Sears' overall apparel strategy. It
further differentiates Sears as a destination for nationally recognized
brands, improves its apparel offering and accelerates growth of its
customer-direct business. Lands' End and Covington, Sears' new proprietary
classic apparel line launching this fall, will be the foundation of the
company's proprietary apparel offerings. Including other important national
brands, Sears will provide compelling apparel assortment choices to its
customers.
"Lands' End is a very successful and well-managed company," Lacy
said. "We were drawn to Lands' End's brand strength across all apparel
categories, including men's, women's and children's. It is an excellent fit
for Sears and our customers, and will aid us in becoming the preferred
shopping destination for families. We can help accelerate the growth of the
Lands' End direct business through Sears' extensive customer relationships."
"Today's transaction allows us to increase the market penetration
of the Lands' End brand through exclusive retail distribution in
approximately 870 Sears stores," said David F. Dyer, president and chief
executive officer of Lands' End. "Strategically, we view retail
distribution of our products as an important growth opportunity. We were
considering the prospect of opening stores ourselves or seeking a strategic
partner, and ultimately decided that our alliance with Sears offered the
most exciting opportunity. Sears is the logical partner for us, considering
its heritage of quality and strong proprietary brands, such as Craftsman
and Kenmore. I feel confident that customers will respond well to another
exceptional brand at Sears."
Dyer will continue to lead the Lands' End business, reporting
to Lacy after the transaction closes. Dyer also will assume responsibility
for Sears' existing customer-direct business, which includes sears.com,
catalogs and specialty merchandise.
Sears Reaffirms 2002 Guidance
Lacy said the transaction does not alter Sears outlook for the
year. The transaction is expected to be slightly dilutive to break-even in
2002 and 2003 and significantly accretive in 2004. "Considering the minimal
impact to 2002 earnings, we continue to expect 2002 full year comparable
earnings per share, including Lands' End, to increase approximately 17
percent from the prior year amount of $4.22," Lacy said. Sears does not
expect to record a special charge for the Lands' End transaction.
Webcast Scheduled
Sears will webcast an analyst conference call this morning at 9:30
a.m. Eastern/8:30 a.m. Central time. The call will be webcast live over the
Internet at sears.com. (Lands' End will conduct an analyst call at 10:45
a.m. Eastern/9:45 Central time.) To access the Sears webcast, click on
"Investors" and select "Events and Webcasts." A replay of the call will be
available on the Web site for approximately one week. Software necessary to
listen to the webcast, Windows Media Player or Real Player, can be
downloaded from the webcast site. Downloading the software may take up to
22 minutes with a 56K speed modem.
About Our Companies
Lands' End is a direct merchant of traditionally styled, classic
casual clothing offered to customers around the world through regular
mailings of its monthly and specialty catalogs and via the Internet at
landsend.com. In 2001, Lands' End annual revenue was approximately $1.6
billion.
Sears, Roebuck and Co. is a broadline retailer with significant
service and credit businesses. In 2001, the company's annual revenue was
more than $41 billion. The company offers its wide range of apparel, home
and automotive products and services to families in the U.S. through Sears
stores nationwide, including approximately 870 full-line stores. Sears also
offers a variety of merchandise and services through its Web site,
sears.com.
Sears, Roebuck and Company Cautionary Statement Regarding
Forward-Looking Information
Certain statements made in this news release, including statements
under the heading "Sears Reaffirms 2002 Guidance" and other statements
using the terms "expected," "will," "plans" and other words of similar
meaning, are "forward-looking statements" based on assumptions about the
future, which are subject to risks and uncertainties, such as competitive
conditions in retail; changes in consumer confidence and spending; interest
rates, delinquency and charge-off trends in the credit card receivables
portfolio; the successful execution of and customer reactions to the
company's strategic initiatives, including the full-line store strategy and
the proposed acquisition of Lands' End; Sears' ability to integrate and
operate Lands' End successfully; anticipated cash flow; general economic
conditions and normal business uncertainty. Sears cautions that these
statements are not guarantees of future performance. Actual results may
differ materially. In addition, Sears typically earns a disproportionate
share of its operating income in the fourth quarter due to seasonal buying
patterns, which are difficult to forecast with certainty. The company
intends the forward-looking statement in this release to speak only as of
the time of this release and does not undertake to update or revise this
projection as more information becomes available.
Lands' End Cautionary Statement Regarding Forward-Looking Information
Statements in this release that are not historical, including,
without limitation, statements regarding our plans, expectations,
assumptions, and estimations for this transaction or for fiscal 2003
revenues, gross profit margin, and earnings, as well as anticipated sales
trends and future development of our business strategy, are considered
forward-looking and speak only as of today's date. As such, these
statements are subject to a number of risks and uncertainties. Future
results may be materially different from those expressed or implied by
these statements due to a number of factors. Currently, we believe that the
principal factors that could create uncertainty about our future results
are the following: customer response to our merchandise offerings,
circulation changes and other initiatives; the mix of our sales between
full price and liquidation merchandise; overall consumer confidence and
general economic conditions, both domestic and foreign; effects of weather
on customer purchasing behavior; effects of shifting patterns of e-commerce
versus catalog purchases; costs associated with printing and mailing
catalogs and fulfilling orders; dependence on consumer seasonal buying
patterns; fluctuations in foreign currency exchange rates; and changes that
may have different effects on the various sectors in which we operate
(e.g., rather than individual consumers, the Business Outfitters division,
included in the specialty segment, sells to numerous corporations, and
certain of these sales are for their corporate promotional activities). Our
future results could, of course, be affected by other factors as well.
Also, this transaction is not yet completed and is subject to a two-thirds
minimum tender condition. More information about these risks and
uncertainties may be found in the company's 8K and 10K filings with the S.E.C.
The company does not undertake to publicly update or revise its
forward-looking statements even if experience or future changes make it
clear that any projected results expressed or implied therein will not be
realized.
Additional Information
This announcement is neither an offer to purchase nor a
solicitation of an offer to sell securities of Lands' End. At the time the
offer is commenced, Sears will file a tender offer statement with the U.S.
Securities and Exchange Commission and Lands' End will file a
solicitation/recommendation statement with respect to the offer. Investors
and Lands' End stockholders are strongly advised to read the tender offer
statement (including an offer purchase, letter of transmittal and related
tender documents) and the related solicitation/recommendation statement
because they will contain important information. These documents will be
available at no charge at the SEC's Web site at www.sec.gov and may also be
obtained by calling (800) 732-7780 and selecting option three.
# # #
Exhibit (a)(5)(B)
Lands' End Themes - Key Messages
Strategic
- ---------
o Sears acquiring a great company, great heritage, well-performing
- Excellent growth prospects, which Sears can accelerate
o Sears acquiring a great brand - Value far beyond direct-to-customer
channel
- Value Sears can improve through retail distribution
o Sears will benefit from Lands' End brand in store
- Fits nicely with apparel strategy
- Offers differentiation and draw
- With Covington, proprietary "better" and "best" end of assortment
- National brands will continue to be very important
o Customer sets complementary
- Lands' End customers loyal, upscale, well educated, compare with
Sears' hardlines customers
- Both have deep and growing customer databases
- Opportunities to grow both through cross marketing
o Lands' End will be a wholly owned subsidiary
- Dodgeville will remain headquarters
- Will retain products, culture, strong customer relationships
- Lands' End expected to manage its and Sears' online and catalog
operations
o Lands' End's CEO will continue to lead Lands' End and will report to
Alan Lacy
- Lands' End's management team is excited about the potential growth
this offers and every member of the executive team has committed to
guide the long-term growth of the company
o Acquisition accelerates growth strategy for both
- Some logical consolidation of administrative functions
- Both will benefit from procurement leverage, economies of scale
o Rollout of store merchandise expected by fall 2003
- Sears will carry most popular men's, women's, children's apparel
- Plus limited assortment of footwear, accessories, home fashions
- Lands' End catalog and website to carry full assortment.
- Some key items in selected Sears stores for 2002 holiday
Financial
- ---------
o Cash transaction expected to create significant shareholder value
- Slightly dilutive to break-even in 2002 and 2003, significantly
accretive in 2004
- Sears reaffirms 2002 EPS guidance
o Closing expected in June, following approval by Lands' End
shareholders and regulators.
This document contains "forward-looking statements" based on assumptions
about the future, which are subject to risks and uncertainties, such as
competitive conditions in retail; changes in consumer confidence and
spending; the successful execution of and customer reactions to Sears'
Full-line store strategy and the proposed acquisition of Lands' End; Sears'
ability to integrate and operate Lands' End successfully; anticipated cash
flow; general economic conditions and normal business uncertainty. These
statements are not guarantees of future performance, and actual results may
differ materially. The company intends the forward-looking statements in
this letter to speak only as of the time of this letter and does not
undertake to update or revise them as more information becomes available.
This document is neither an offer to purchase nor a solicitation of an
offer to sell securities of Lands' End. At the time the offer is commenced,
Sears will file a tender offer statement with the U.S. Securities and
Exchange Commission and Lands' End will file a solicitation/ recommendation
statement with respect to the offer. Investors and Lands' End stockholders
are strongly advised to read the tender offer statement (including an offer
to purchase, letter of transmittal and related tender documents) and the
related solicitation/recommendation statement because they will contain
important information. These documents will be available at no charge at
the SEC's website at www.sec.gov and may also be obtained by calling (800)
732-7780, and selecting option #3.
Exhibit (a)(5)(C)
Alan Online letter
May 13, 2002
Dear Sears Associate,
Undoubtedly you have heard the good news by now that Sears will acquire
Lands' End, Inc. I am very excited about this significant growth
opportunity.
Lands' End products are known for superb classic style as well as quality
and value. Its direct-to-customer operations, through its compelling
catalog and innovative online site, are among the best in the industry.
Lands' End's management and employees are exceptional; Lands' End is
recognized as one of Fortune's Top 100 places to work. This deal makes very
good sense for us, strategically and financially.
There is an uncommonly strong fit between our companies. Lands' End's
excellent quality products fill a key slot in Sears' apparel strategy as
our "best" proprietary brand, fitting in very well with Covington's
"better" position and our leading national brands. Lands' End's goods will
be a compelling point of differentiation for Sears' softlines and will draw
new apparel shoppers to our stores.
Lands' End's strategy, meanwhile, calls for adding retail distribution to
their outstanding direct-to-customer channels. The best path for that
expansion is through an alliance with an established national retailer.
Sears is the ideal partner.
Our customers are complementary. Lands' End's customers are loyal,
generally upscale, well educated and compare closely with Sears' hardlines
customers. Both companies have deep, sophisticated and growing databases.
Opportunities exist to grow both businesses through cross marketing and
customer relationship management.
Each company operates a leading website, which complement each other. Links
will be established between sears.com and landsend.com. Sears will benefit
from Lands' End's exceptional multi-channel capabilities and high-touch,
direct-to-customer expertise. Lands' End will benefit from our extensive
customer relationships.
This acquisition is all about growth. There will be some natural synergies
in support activities, some logical consolidations of administrative
functions. Both companies will benefit from procurement leverage and other
economies of scale. But this is not about cost cutting, and Sears wants to
build on the best of what both organizations offer.
Sears wants Lands' End to retain its character and momentum. As a wholly
owned subsidiary, Lands' End will continue to be centered in Dodgeville,
Wis. CEO David Dyer will continue to lead Lands' End and will report to me.
Dyer also will manage Lands' End's and Sears' online and catalog
operations. Dennis Honan and his team will now report to Dyer.
Full rollout of store merchandise is expected by the fall of 2003. Stores
will carry Lands' End's most popular men's, women's and children's apparel,
plus an assortment of footwear, accessories and home fashions. Lands' End's
catalog and website will carry the full assortment. Key items of Lands'
End's merchandise are expected to be available in a limited number of Sears
stores for the 2002 holiday season.
On the financial side, this is a cash transaction worth approximately $1.9
billion. Over the long term, Sears expects Lands' End to create significant
shareholder value (near term, we expect the acquisition to be slightly
dilutive to break-even in 2002 and 2003, and significantly accretive in 2004).
We expect to close the transaction in June.
I would like to welcome Lands' End's employees and management to our
company. As with the introduction of Covington, this exciting acquisition
is another sign to our customers, our investors and our competition that we
are building a new Sears.
- -- Alan
This document contains "forward-looking statements" based on assumptions
about the future, which are subject to risks and uncertainties, such as
competitive conditions in retail; changes in consumer confidence and
spending; the successful execution of and customer reactions to Sears'
Full-line store strategy and the proposed acquisition of Lands' End; Sears'
ability to integrate and operate Lands' End successfully; anticipated cash
flow; general economic conditions and normal business uncertainty. These
statements are not guarantees of future performance, and actual results may
differ materially. The company intends the forward-looking statements in
this letter to speak only as of the time of this letter and does not
undertake to update or revise them as more information becomes available.
This document is neither an offer to purchase nor a solicitation of an
offer to sell securities of Lands' End. At the time the offer is commenced,
Sears will file a tender offer statement with the U.S. Securities and
Exchange Commission and Lands' End will file a solicitation/ recommendation
statement with respect to the offer. Investors and Lands' End stockholders
are strongly advised to read the tender offer statement (including an offer
to purchase, letter of transmittal and related tender documents) and the
related solicitation/recommendation statement because they will contain
important information. These documents will be available at no charge at
the SEC's website at www.sec.gov and may also be obtained by calling (800)
732-7780, and selecting option #3.
Exhibit (a)(5)(D)
SEARS
Sears, Roebuck and Co.
Acquisition of Lands' End Analyst Briefing
Sears, Roebuck and Co.
Acquisition of Lands' End
Analyst Briefing
May 13, 2002
Forward Looking Statements
- -----------------------------------------------------------------------------
This presentation includes forward looking statements, concerning the outlook
for the remainder of 2002 and expectations about the company's plans and the
impact of the Lands' End acquisition. The statements are based upon
assumptions about the future, which are subject to risks and uncertainties,
such as changes in consumer confidence, competitive conditions in the retail
industry, changes in bankruptcy delinquency and charge-off trends, interest
rates, and other credit trends, successful execution of and customer
reactions to the company's products and strategic initiatives, including the
fall line store strategy and the proposed acquisition of Lands' End; Sears
ability to integrate and operate Lands' End successfully. Actual results
could differ materially. The company intends these statements to speak only
as of the date of this presentation and does not undertake to update them as
more information becomes available.
Additional Information
- -----------------------------------------------------------------------------
This presentation is neither an offer to purchase nor a solicitation of an
offer to sell securities of Lands' End. At the time the offer is commenced,
Sears will file a tender offer statement with the U.S. Securities and
Exchange Commission and Lands' End will file a solicitation/recommendation
statement with respect to the offer. Investors and Lands' End stockholders
are strongly advised to read the tender offer statement (including an offer
to purchase, letter of transmittal and related tender documents) and the
related solicitation/recommendation statement because they will contain
important information. These documents will be available at no charge at the
SEC's website at www.sec.gov and may also be obtained by calling (800)
732-7780, and selecting option #3.
Agenda
- -----------------------------------------------------------------------------
o Executive Summary
o Lands' End - Overview
o Strategic Positioning
o Integration Plan
o Summary
Agenda
- -----------------------------------------------------------------------------
---------------------------
o Executive Summary
---------------------------
o Lands' End - Overview
o Strategic Positioning
o Integration Plan
o Summary
Executive Summary
- -----------------------------------------------------------------------------
o Sears has entered into a definitive acquisition agreement with Lands End
- Important milestone in Sears history
- Joins two very strong and profitable companies
- Cash transaction totaling $1.9B, $62 per share
o Lands' End is a great fit
- Outstanding brand equity, product quality
- Established customer relationships
- Excellent infrastructure and capabilities
o Accelerates progress towards building a new Sears
- Fills gap in current assortment
- Enhances growth prospects of Full-Line Stores and Customer Direct
Agenda
- -----------------------------------------------------------------------------
o Executive Summary
-------------------------------
o Lands' End - Overview
-------------------------------
o Strategic Positioning
o Integration Plan
o Summary
Lands' End - Overview
- -----------------------------------------------------------------------------
Background o Founded in 1963 by Gary Comer in Chicago
o $1.6B in Revenue; $67M Net Income
o Over 8,300 employees worldwide
Market o Primary distribution channel is direct to consumer
o Largest U.S. specialty apparel catalog company
o Largest internet seller of apparel
Product o Classically styled Men's, Women's and Kid's apparel
o Reputation for quality, satisfaction guaranteed
Lands' End Customer Base
- -----------------------------------------------------------------------------
Affluent o Demographic overlap with Sears hardlines customer
(but limited softlines overlap)
Loyal o Average spend per customer over $200/yr
o High customer retention rate
Large & o 33M customer file
Growing o Strong growth in active customer base
U.S. Major Apparel Companies
- -----------------------------------------------------------------------------
2001 Revenue ($M)
-----------------
Jones Apparel Liz Polo Ralph Tommy Eddie Lands' Abercrombie LL Bean J. Crew
Group Claiborne Lauren Hilfiger Bauer End & Fitch Group
4,073 3,449 2,266 1,849 1,599 1,,569 1,365 1,067 741
Well Established Direct to Customer Business
- -----------------------------------------------------------------------------
2001 Revenue
------------
Distribution Channel Business Segment*
- -------------------- -----------------
Internet Catalog & Retail International Specialty
$317.M $1,242M $142 $433M
21% 79% 10% 30%
Apparel
$873M
60%
Notes:
- -----
International: Includes UK, Germany and Japan
Retail: 16 Outlets in U.S.; 4 abroad
* Excludes shipping and handling revenue
Lands' End - A Strong Fit With Sears
- -----------------------------------------------------------------------------
Great Company
o Strong heritage; represents quality, satisfaction guaranteed.
o Exceptional multi-channel capabilities
o Best-in-class product development, quality, fulfillment,
customer service, and database capabilities
Great Brand
o High brand awareness and equity
o Strong customer loyalty
o Significant growth prospects
Great Fit with Apparel Strategy
o Adds recognized brand
o Creates differentiation and Sears-specific draw
o Improves quality, consistency, and value of offering
Agenda
- -----------------------------------------------------------------------------
o Executive Summary
o Lands' End - Overview
- ------------------------------
o Strategic Positioning
- ------------------------------
o Integration Plan
o Summary
Lands' End - An Important Element In Our Proprietary Brand Offering
- -----------------------------------------------------------------------------
SEARS
Quality, Value Satisfaction Guaranteed
Hardlines Softlines
- --------- ---------
Craftsman Lands' End
Kenmore Covington
The Next Generation Canyon River
DieHard
apostrophe(R)
SEARS Quality, Value, Satisfaction Guaranteed
- -----------------------------------------------------------------------------
Craftsman Lands' End
Direct Merchants
Kenmore
GE Nike Covington
The Next Generation
DieHard Levi's Dockers'
BOSE
MAYTAG Canyon River
Whirlpool JOHN HENRY
GOODYEAR Mudd Hanes
MICHELIN SONY apostrophe(R) carter's
celebrating imagination(TM)
Sears and Lands' End
- -----------------------------------------------------------------------------
Positioning o Sears "Best" quality flagship apparel brand
o Same great quality product that customers find in
the catalog today
Target o Existing:
- Lands' End customers
- Sears hardlines, non-apparel customers
- Sears apparel customer
o New customers
Product o Available in all Full-line Stores
o Best sellers and focused key items
o Offerings in Women's, Men's, and Kid's
Proprietary Brand Positioning - Future State
- -----------------------------------------------------------------------------
Women's Future State
---------------------------------------------------------
| Career | Casual
| --------------------------|------------------------------
| |
| Update Apostrophe |
| --------------------------|------------------------------
| Classic Laura Scott | Covington
Lifestyle | Lands' End | Lands' End
| --------------------------|------------------------------
|Traditional Modern Essentials | Classic Elements
| |
| ------------|-------------|---------------|--------------
| Good Better Best | Good Better Best
| |
--------------------------- ------------------------------
Price/Quality Price/Quality
Sears and Lands' End
- -----------------------------------------------------------------------------
In Store o Prominent integrated positioning in Women's, Men's and
Experience Kid's assortment
o Ability to return Lands' End product from catalog/online
to Sears Full-Line Stores
Pricing o Everyday competitive pricing with seasonal clearance
o Consistent with Lands' End catalog/online pricing
Marketing o Increased brand awareness through integrated marketing
program
Sears Will Help Lands' End Grow
- -----------------------------------------------------------------------------
o Broad retail access
o Increased brand awareness
- Increased marketing investment
- Product presence in approximately 870 Full-line stores
- Inclusion in up to 90M pre-prints per week
- Inserts in 26M credit card statements per month
o Targeted prospecting of 130M Sears customers
o 3M+ unique visitors to sears.com each month
o Logical brand expansions (e.g. sporting gear, camping, patio...)
Agenda
- -----------------------------------------------------------------------------
o Executive Summary
o Lands' End - Overview
o Strategic Positioning
- ---------------------------------
o Integration Plan
- ---------------------------------
o Summary
Integration Plan
- -----------------------------------------------------------------------------
o Core Lands' End business to remain intact
- Organizational structure will remain largely unchanged
- Will assume responsibility for Sears Customer Direct businesses
o Sears to leverage Lands' End capabilities
- Product development
- Quality
o Capture "easy" cost synergies
- Paper and non-merchandise procurement
- Administrative SG&A
o Highly structured / programmatic approach
- Fully resourced team
- Extensive management experience
Transaction Detail
- -----------------------------------------------------------------------------
o Cash transaction totaling $1.9B, $62 per share
- Premium of 21.5% over Friday's close of $51.02 and a 26% premium
vs. the 90-day average of $49.03
o Transaction to close this summer
o Minimal incremental leverage to Sears to fund purchase
- Lands' End has no public market debt
- Transaction has been reviewed with rating agencies
o Maintaining previous 2002 comparable EPS growth guidance of 17%
- No material impact to 2002 or 2003 earnings
- No special charge for transaction
Agenda
- -----------------------------------------------------------------------------
o Executive Summary
o Lands' End - Overview
o Strategic Positioning
o Integration Plan
- --------------------------------
o Summary
- --------------------------------
Summary
- -----------------------------------------------------------------------------
o Lands' End is an outstanding fit with Sears
- Common brand heritage representing outstanding quality and value
- Strength in casual, classic merchandise dovetails with Sears
apparel strategy
- Excellent infrastructure and business capabilities
o Enhances both companies' growth prospects
- Accelerates Customer Direct growth for both Sears and Lands' End
- Provides exclusive retail distribution channel for Lands' End
- Competitively differentiates Sears Apparel offerings
SEARS LANDS' END