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Sears to spin off Orchard Supply Hardware chain

June 23, 2011 | 10:55 pm

This post has been corrected. See the note at the bottom for details.

Sears Holdings Corp. plans to spin off its home improvement unit, Orchard Supply Hardware, as a separate publicly traded company, the department store giant said Thursday.

Known as OSH, Orchard Supply Hardware is a San Jose-based chain that operates 89 stores, all of them in California. OSH reported a profit of $8.7 million on $660.7 million in revenue in fiscal 2010.

The chain plans to be traded as OSHS on the Nasdaq once Sears Holdings, its parent company since 1996, spins it off as a standalone company.

Significantly smaller than its national big-box rivals Home Depot and Lowe's, OSH began in the 1930s as a purchasing cooperative by orchardists selling picking pails and ladders, according to the San Jose Mercury News. In the 1950s, it became a general retailer and has gone through several ownership changes since.

Sears Holdings said in a filing with the Securities and Exchange Commission that it believed OSH would generate more value for shareholders as an independent company. The company did not list a target price for the stock and said the spin-off, expected to go to market in the fall, still needed final approval from its board of directors.

[For the Record, 11 a.m. June 24: A previous version of this post referred to the spin-off as an IPO. Instead, current Sears shareholders will be issued shares of the new Orchard Supply.]

-- Andrea Chang