Sears selling Craftsman tool brand to gain cash infusion
Chain also announces shutdown of 109 Kmart, 41 Sears locations
CHICAGO — Sears Holdings will sell its Craftsman tool brand to Stanley Black & Decker for about $900 million, the companies announced Thursday.
The company also has announced that 109 Kmart and 41 Sears stores, including the one in Roswell, N.M., would be closing. Those 150 stores generated about $1.2 billion in sales in the last year but lost about $60 million, Sears said.
“Many of these stores have struggled with their financial performance for years and we have kept them open to maintain local jobs and in the hopes that they would turn around. But in order to meet our objective of returning to profitability, we have to make tough decisions and will continue to do so, which will give our better performing stores a chance at success,” Sears CEO Edward Lampert said in a news release.
The deal with Stanley will provide a cash infusion for Sears, but it comes at a cost — broadening distribution of the well-known brand gives consumers one less reason to choose to shop at the struggling retailer.
Stanley will pay $525 million when the deal closes — expected this year — and another $250 million after three years, the companies said. Stanley will pay Sears a percentage of its new sales of Craftsman products for 15 years, and during that time, Sears will be able to continue selling Craftsman products royalty-free.
“This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels,” Stanley President and CEO James Loree said in a news release.
Sears, headquartered in suburban Chicago, announced in May that it was looking for ways to wring more cash from some of its best-known brands — Craftsman, Kenmore and DieHard.
Currently, about 90 percent of Craftsman products are sold through Sears, Kmart and Sears Hometown stores, Loree said. Loree said he thinks Stanley can increase revenue growth by about $100 million a year by making Craftsman available outside Sears stores.