Sears Holdings (NASDAQ:SHLDQ), the embattled US department-store chain, has been struggling to remain relevant and profitable in today's retail environment for some time now. Naturally, the company has been looking for ways to unlock value and raise capital. One of its most recent spinoffs, Lands' End (NASDAQ:LE), a clothing and lifestyle brand that Sears at one point bought for some $1.9 billion, just released its first stand-alone earnings report. While some analysts feared things would go down the tubes for Lands' End following the spinoff, the company seems to be doing perfectly well.

Spin doctor
As mentioned in the introduction, Sears' CEO Edward Lampert has been scrambling for ways to raise capital. One of the ways in which he has been doing this is by selling the company's retail holdings, many of which have been put on the block. Another way of doing this is to spin off the company's better-performing holdings.

The Lands' End spinoff was announced as early as December but was completed on April 4. Under the terms of the deal, Sears shareholders received three units of Lands' End stock for every Sears share. The reasons for the race to raise capital are obvious, the company losing some $1.4 billion last year with same-store sales down 3.8%.

Initial reactions to the move were mixed, as some analysts suggested that an independent company would be saddled with higher costs as a result of independence. To some degree, this was the case. Lands' End paid Sears a $500 million dividend before the spinoff. It borrowed this sum and will have to pay interest on it. On the other hand, some analysts believe that the company will be able to raise its margins through a sharper focus on its operations and lower operating expenses.

Better off alone
Following the company's most recent earnings figures, it seems as if fears surrounding the company's independence may be unfounded. The numbers are sound. Comp-store sales increased by 3.4%, while overall sales rose by 3.6% compared to last year. Operating income soared 57% to $18.8 million for the period, with earnings per share rising 48% to $0.34, the news sending the stock up around 10%.

There were a few factors that helped Lands' End defy the winter slump that affected most retailers. First of all, 84% of revenue for the period was derived from online and catalog sales, which means that people didn't have to go out and brave the cold. Secondly, many of the major expenses that one would typically associate with becoming a stand-alone company were conspicuously absent, as the cost of materials as well as sales and administrative expenses remained more or less flat.

According to management, its new independent status allowed it to focus more on promotions and marketing, which would lead one to believe that it's actually better off without Sears' guidance. Finally, and perhaps most importantly, people like the company's products. The brand sports a kind of timeless, classic look that appeals to a wide variety of shoppers and has also been doing a fairly good job responding to new fashion trends. As such, things look pretty good for the brand new stock.

Foolish takeaway
The Lands' End spinoff is the latest in a series of moves by Sears management to raise capital and return to focusing on its core business. So far, it has gone well. The company delivered excellent results for its first stand-alone earnings report and doesn't seem to have experienced a rise in expenses as a result of its independence. With an appealing product portfolio and a sharper focus on marketing and managing expenses, the future looks fairly bright for Lands' End.