NEW YORK (AP) — Sears is moving forward with plans to spin off its Hometown and Outlet stores as well as some hardware stores into a separate publicly traded company.
The news sent the company's stock up $2.94, or 5.7 percent, to close at $54.36 Monday.
Sears had signaled that it would split the companies back in February. There are a total of 1,238 Hometown, Outlet and hardware stores as of April 28, according to Sears, which is trying to turn around its business and spruce up its image. It has already closed five Hometown stores, eight hardware stores and one Outlet store.
Sears, which also owns Kmart, has looked at spinoffs and real estate sales to restore profitability and boost shareholder confidence. Aside from the separation of the Hometown, Outlet and some hardware stores, the company announced in May that it would spin off a stake in its Canada division.
Sears said in its filing with the Securities and Exchange Commission that it expects to raise $346.5 million with the spin-off of the Hometown, Outlet and hardware stores. It previously said that it expected the deal to raise between $400 million and $500 million. A cash dividend of $100 million is also expected to be paid to Sears.
Sears Chairman Edward Lampert's ESL Investments Inc. will own a majority stake in the business being spun off.
For fiscal 2011, the combined Sears Hometown, hardware and Outlet businesses had net income of $33.1 million on sales of about $2.34 billion. That compares with fiscal 2010 net income of $49.8 million on sales of approximately $2.35 billion.
Sears Holdings Corp., based in Hoffman Estates, Ill., is set to report its second-quarter earnings Thursday.
The new company will be listed on the Nasdaq under the "SHOS" ticker symbol.