Ending years of speculation, Sears Holdings announced it is selling its popular Craftsman brand of tools and home improvement products to Stanley Black & Decker for an estimated $900 million, as Sears looks to raise much-needed cash as it faces perpetual challenges in its retail business.
At the same time, Sears Holdings plans to close 150 stores this spring, including 108 Kmart and 42 Sears locations, and has gotten access to $500 million in secured loans from CEO and Chairman Edward Lampert’s hedge fund, ESL Investments.
The agreement with Stanley Black & Decker gives the New Britain, CT-based toolmaker the right to develop, manufacture and sell Craftsman-branded products in non-Sears stores, including retail industrial and online channels here and around the world, Sears said in a release.
As part of the agreement, Sears Holdings will continue to offer Craftsman-branded products, sourced from existing suppliers, through its retail channels via a perpetual license from Stanley, which will be royalty-free for the first 15 years.
“Craftsman is a legendary American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value,” said Stanley Black & Decker President and CEO James M. Loree in the release. “This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels.”
Loree said Stanley will continue to invest in Craftsman in an effort to boost sales through all of its channels, including expansion of its manufacturing footprint in the U.S.
MCM’s Musings: The Craftsman deal was a long time coming for Sears, as analysts have speculated on the fate of the popular brand amid Sears’ ongoing woes and quarter after quarter of dismal results. This represents a significant upside opportunity for Stanley Black & Decker as only 10% of Craftsman products are sold outside of Sears today. One can only wonder about the fate of another popular line: Kenmore appliances, which may be similarly spun out from the once-mighty retailer. Last spring Sears opened a pilot standalone appliance store in Fort Collins, CO; since then only one more has opened. Its 24 Sears Auto centers in the U.S. will either be eliminated or converted to Sears appliance stores by 2018 – that is, if Kenmore isn’t snapped up by another opportunistic white knight in a fire sale.