UPDATE 2-Sears Holdings changing operating structure

(Adds comment, updates with closing stock price)

ATLANTA, Jan 22 (Reuters) - Sears Holdings Corp (SHLD.O), looking to reverse recent profit declines, on Tuesday detailed a new structure to separate its business units and simplify the way they are managed, sending its shares up as much as 19 percent.

The retailer controlled by hedge fund manager Edward Lampert will have five types of business units under the new decentralized structure: operating businesses, support, brands, online and real estate.

Each unit will have its own leader and an advisory group including senior Sears Holdings executives who will oversee performance.

"I think this is what a lot of value shareholders like myself have been expecting for some time, to be able to take this company and split it apart so we can really look at it in terms of its asset value separate from its operational value," said Sears investor Scott Rothbort, president of LakeView Asset Management in Millburn, New Jersey.

Sears Holdings, formed with the 2005 merger of Kmart and Sears, said the move will allow individual businesses to operate more efficiently and give them greater power to focus on consumers.

"At the time of the merger, a centrally managed structure was essential to control costs and focus on integrating the two companies," Lampert said in a statement. "Now, it's time to empower individual businesses and teams to focus on the customer experience and performance."

In recent years, Sears has struggled to win customers from a host of competitors, and now faces an economic slowdown that has hurt sales of home goods such as appliances and tools.

Sears warned last week that fourth-quarter profits could be less than one-half those of year-ago levels, and said its holiday sales fell as the crumbling U.S. housing market and competition hurt business.

Sears Holdings, whose brands include DieHard, Craftsman and Kenmore, has reported profit declines for the past two quarters. Sales at stores open at least a year have fallen at both Kmart and Sears for the past seven quarters.

"2008 promises to be an even weaker consumer spending year and it makes little sense to just keep the same structure and approach to retailing and to expect that to be any more successful than it was in 2007," Credit Suisse analyst Gary Balter said in a research note.

"Sears' most valuable asset, its real estate, has lost significant value in this market, the brands have also declined significantly and even the cash flow has not been as strong as expected," Balter added.

The company said its operating business units will include current product lines such as appliances, apparel and electronics. Support units will include marketing, store operations and customer strategy.

The real estate and online units will focus on increasing the "sales productivity" of real and virtual holdings.

Sears Holdings shares closed up $10.42, or 11.7 percent, to $99.85 on Nasdaq after touching $106.78 earlier in the day.

The shares are down about 49 percent from a high of $195.18 reached in April 2007. (Reporting by Karen Jacobs; Editing by Tim Dobbyn/Jeffrey Benkoe)