By  on November 18, 2005

NEW YORK — As Sears Holdings Corp. gets ready to post its third-quarter earnings results on Dec. 6, one analyst set a $169 price target on the stock — a 46 percent upside from recent valuations. Meanwhile, investors are waiting to hear some news about the retailer's apparel strategy as well as the fate of its Lands' End business.

Shares of Sears closed at $119.50, up 2.4 percent in trading on Thursday.

Investment banker Peter J. Solomon of the company that bears his name said at a recent conference on mergers and acquisitions, that he thinks chairman "[Edward] Lampert will figure out how to deal with Lands' End."

Sears bought the catalogue firm in 2002 for $1.9 billion. Sources said the asking price in March for Lands' End was $1.2 billion. The company later denied the report, and Lampert's first proclamation as chairman of the new Sears Holdings Corp. following the March 24 merger of Sears and Kmart was that Lands' End wasn't for sale. However, sources in the banking world said management pulled back after not liking the low valuations it was getting. Sears is said to have even approached former Lands' End chief executive officer Michael Smith to gauge his interest in returning to the business.

Solomon, whose firm represented the catalogue company when it was shopped in May 2002, said in a recent interview that his pitch to then Sears chairman Alan Lacy was, "When you go into a Sears, you look to the left and see a great brand name, Kenmore. You look to the right and you see Craftsman. At the back is Delco. In the middle of the store, what you see are labels. This is a chance to buy a great brand in the ready-to-wear business."

Following the retailer's second-quarter earnings report on Sept. 8, Bill Dreher of Deutsche Bank issued a research note predicting that Lampert, who was chairman of Kmart Holding Corp. and who engineered the merger with Sears, Roebuck & Co., will fulfill his vision for the combined company. According to Dreher, Lampert is taking his time to look at the "moving parts" before planning his next move.

As for valuation of the company, Dreher wrote that "significant value realizing catalysts provides upside potential in the shares of Sears Holding." One of those is the possible sale of Lands' End, which Dreher wrote could "generate aftertax cash proceeds of about $1.54 billion."

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