pounds 395m Freemans sale fails to boost Sears

Liam Strong, the beleaguered Sears chief executive, moved to placate disillusioned investors yesterday when he announced the sale of the group's Freemans mail-order business to Littlewoods for pounds 395m. He also promised to use the proceeds to return pounds 410m to shareholders in six months time in the form of a special dividend or share buy-back.

However, the move failed to impress the stock market where Sears shares remained unchanged at 88p. The sale price was below market expectations and analysts still predicted that Mr Strong would be replaced and that Sears was a candidate for break-up. "Sears will have pounds 400m sitting in the bank in the short term during which they will be extremely vulnerable to a bid," said Nick Bubb at MeesPierson. "There won't be a long term."

The Freemans deal will see Sears take a pounds 220m goodwill write-off which will force the group into a pounds 165m loss in the current year. It will be the second substantial loss in consecutive years.

If the deal receives approval from shareholders it will signal the first move in a long awaited shake-up of Britain's sleepy pounds 5.5bn agency mail- order industry.

It is the most significant acquisition in Littlewoods' 70-year history and will make the privately owned group a powerful rival to market leader Great Universal Stores with an almost identical share of 24 per cent.

The integration of the two businesses is likely to see hundreds of job losses at Freemans locations, which include a London head office, a warehouse in Peterborough and call centres in Sheffield and Orpington. Freemans has 3,000 staff compared with 10,000 at Littlewoods home shopping.

Littlewoods would not be drawn on possible redundancies but said it hoped to make annual cost savings of pounds 25m after three years on distribution, sourcing and marketing.

Littlewoods is funding the deal largely through new banking facilities. Though gearing will be around 58 per cent, corporate strategy director Chris Baker said the group was not financially stretched and could afford other deals.

Freemans made trading profits last year of pounds 38m but this year's profits are expected to be substantially lower.

Littlewoods said it would retain the Freemans brand name and build up its direct sales business. It is not taking The Source, a high street housewares format which was part of the Freemans group. Sears will now either seek a buyer for the stores, or a joint-venture partner.

The move signals a more aggressive approach by Littlewoods under new chief executive James Ross, who joined from Cable & Wireless last year. Earlier this week Bob Willett resigned as managing director of the stores division and Littlewoods said it was halting the stores' expansion plan to concentrate on mail order. The new head of the store division is Mike Wynne, who used to run Littlewoods' international division.

A Christmas trading statement from Littlewoods yesterday revealed that the high street stores were the weakest performer with like-for-like sales up by just 3.4 per cent. The Index catalogue shops recorded a 6.6 per cent gain. Sales at the home shopping division were up by12.6 per cent.

Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreEXCLUSIVE The Shakespeare play that proved too much for more than 100 people
News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Arts and Entertainment
booksThe best children's books for this summer
PROMOTED VIDEO
Sport
Colombia's James Rodriguez celebrates one of his goals during the FIFA World Cup 2014 round of 16 match between Colombia and Uruguay at the Estadio do Maracana in Rio de Janeiro, Brazil
sportColombian World Cup star completes £63m move to Spain
News
news
News
i100
News
people
Sport
Antoine Griezmann has started two of France’s four games so far
sport
Life and Style
techYahoo Japan launches service to delete your files and email your relatives when you die
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
News
i100
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
Life and Style
Dale Bolinger arranged to meet the girl via a fetish website
life
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor