Eddie Lampert-controlled Sears Holdings Corp (SHLD.O), struggling with mounting operating losses and declining sales, said it would spin off its Lands' End clothing business, adding to the list of businesses sold off to raise cash.
Sears, operator of Sears department stores and the Kmart discount chain, has been selling or spinning off assets over the past few years to try to turn around its business.
The company, which had said it was considering selling Lands' End, spun off its Orchard Supply Hardware Stores unit in 2011 and its Sears Hometown and Outlet business last year.
In October, Sears sold some Canadian real estate assets for $383 million and said it was considering separating its auto center business to raise cash.
Sears' sales have been dropping since Lampert combined Sears and Kmart in 2005. Sears had cash and cash equivalents of $599 million as of November 2, down from $671 million on August 3.
Lands' End sells casual clothing, accessories, footwear, and home products online, through catalogs and in stores.
Competitors include Eddie Bauer LLC and L.L. Bean Inc as well as department stores such as J.C. Penney Co Inc (JCP.N).
Lands' End, which was bought by Sears in 2002, generated sales of $1.59 billion in 2012, down from $1.73 billion in 2011. Sears' sales fell to $39.85 billion from $41.57 billion.
The spinoff will be through a pro rata distribution of Lands' End shares to Sears shareholders, Sears said in a regulatory filing on Friday.
Lampert's hedge fund, ESL Investments, currently owns about 48.4 percent of Sears and will own the same stake in Lands' End following the spinoff.
ESL said this week it had reduced its stake in Sears from 55.4 percent by distributing about 7.4 million shares to fund investors.
Lands' End, founded 50 years ago in Chicago, said in a separate statement that it planned to list on the Nasdaq under the symbol "LE."
Sears shares have risen nearly 21 percent this year, closing at $49.98 on the Nasdaq on Thursday.
(Reporting By Maria Ajit Thomas in Bangalore; Editing by Ted Kerr)