Merger deal may be awkward fit for Lands' End

NEW YORK While Kmart Holding Corp. and Sears, Roebuck & Co. are touting their merger's benefits, the deal looks to be an awkward fit for at least one label.

Lands' End, the suburban preppy clothing brand, has had a difficult time since it was acquired by Sears in 2002, and a merger with Kmart isn't likely to help, industry experts say.

Shares of Martha Stewart Living Omnimedia Inc. soared Wednesday on news of the merger, as the company's Martha Stewart Everyday home furnishings look to be a good fit for Sears stores. Likewise, many analysts like the idea of a Kmart or Sears off-the-mall store that sells Kenmore appliances and Craftsman tools.

At the same time, the merger goes against much of the reasoning that originally backed Sears' purchase of Lands' End. At the time of the acquisition, executives had argued that Lands' End clothing was a good fit for the more upscale clientele that came to Sears to buy appliances. However, in a Wednesday conference call with analysts, executives outlined plans to exit many of its mall locations as it expands into several hundred spaces previously occupied by Kmart.

''Our off-the-mall customer is typically looking for more of a casual sportswear-like apparel experience, not necessarily looking for a social occasion dress or fine jewelry,'' Sears Chair and CEO Alan J. Lacy said.

Sears will offer ''more focused and more edited'' merchandise assortments at its off-mall locations, Lacy added.

It's a decent bet that Lands' End won't make the cut if Sears hopes to preserve the brand from further erosion, says Alan Siegel, chief executive of Siegel & Gale, a New York-based branding and marketing firm.

''Lands' End really hasn't fit into the Sears story very well, and this would just exacerbate that,'' Siegel said.

After rolling out Lands' End khakis, oxford shirts, blazers and other middle-of-the-road styles to all of Sears' 870 mall-based department stores last year, Sears of late has reduced although not eliminated the amount of Lands' End merchandise it carries at some stores. By and large, those stores have been located in lower-income or multiethnic neighborhoods, and the merger with Kmart may result in a store base that's still less appropriate for Lands' End.

Last month, Cynthia Maignan, Sears' director of multicultural merchandising, said that Sears in recent months has been pushing Lands' End merchandise toward the back of stores where it hasn't performed well. At those locations, Sears is moving more minority-focused brands to its prominent displays near store entrances, Maignan said.

''I would think we would continue in that direction,'' she said.