STAYIN’ AFLOAT
Sears sells Craftsman for $775M
Stanley Black & Decker may do for Craftsman what Sears couldn’t — get the tools into customers’ hands.
Sears Holdings reached an agreement with Stanley, which will buy Craftsman, a maker of hand and power tools, for $775 million plus royalty fees.
The New Britain, Conn.-based Stanley is paying $525 million up front and another $250 million in 2020, plus fees for the next 15 years.
It’s a financial windfall — though less than the $1 billion estimates experts thought Craftsman could fetch — for cash-starved Sears.
Sears investors, with the strange sight of cash pouring into the beleaguered chain, pushed the company’s shares up 8 percent in early trading on Thursday, but by the end of the day, the stock closed up just 3 cents, at $10.39.
Over the last 10 days, Sears has unleashed a torrent of moves to stanch its financial hemorrhaging (spoiler alert: it’s not good) — including $1 billion in cash infusions and closing 150 more stores. And then on Thursday the sale of one of its strongest assets — the Craftsman brand.
“We are taking strong, decisive actions today to stabilize the company and improve our financial flexibility in what remains a challenging retail environment,” Edward Lampert, chief executive and owner of Sears Holdings, which also includes the Kmart chain, said in a statement.
But it has hardly made a dent in Sears’ long downward spiral. During the crucial holiday shopping season, Sears’ same-store sales declined 12 percent to 13 percent, the company said.
As the company takes on water with no apparent remedy at hand, Lampert, with the Craftsman sale, is moving from throwing money at the problem to selling off parts of the foundering ship.
The poorest-performing stores that had been weighing down the company have already been tossed overboard.
Lampert “needs to raise a lot of cash to keep afloat and he only has a few assets — the brands, product service business and some real estate — that can do so,” said Steven Dennis, a retail consultant who is also a former Sears executive.
Stanley plans to make the iconic 89-year-old Craftsman brand, revered by mechanics, carpenters, plumbers and home repair geeks, more widely available outside of Sears and Kmart stores: Enter Home Depot and Lowe’s.
For the last several years, Craftsman has been sold in Costco and Ace Hardware, generating about $200 million in revenue over the past 12 months, Sears said.
“We intend to invest in the brand and rapidly increase sales,” said Stanley Chief Executive James Loree in a statement.
While fewer shoppers may now visit Sears if they can get Craftsman products elsewhere, it’s possible, say some industry experts, that Sears could make more money on Craftsman in the short term.
“Whatever Stanley sells, Sears gets a piece of that for 15 years,” said one source.