Sears Slims Down: Craftsman Sold, More Stores Closing
Sears Holdings (NASDAQ:SHLD) reached a deal to sell Craftsman and set in motion another round of store closings, as the floundering retailer continues to fight for its survival.
Stanley Black & Decker (NYSE:SWK) said Thursday it will buy Craftsman from Sears for $900 million, while Sears continues to explore potential deals for its Kenmore appliances and DieHard car batteries.
The news came a day after Sears disclosed that another 150 stores will be closed for good, including 108 Kmart and 42 Sears locations. The Hoffman Estates, Ill.-based company shuttered 89 stores during its latest quarter ending in October.
Also this week, Macy’s (NYSE:M) announced that it will close 68 stores across the country, eliminating about 10,000 jobs.
Sears warned that it would accelerate plans to shed underperforming stores in the wake of reporting its fifth quarterly loss in a row. The retailer has lost $9.8 billion since 2011, the last year it recorded a profit, amid declining sales. In May, Sears revealed that it put Craftsman, Kenmore and DieHard on the block.
The Craftsman deal came in well below some expectations, considering that Sears’ iconic tool brand was said to be worth as much as $2 billion.
Under the agreement, Stanley Black & Decker will greatly expand the availability of Craftsman products, which are only available at Sears and a limited number of other retailers such as Ace Hardware. Sears and Kmart currently account for 90% of all Craftsman sales.
Stanley Black & Decker said it has already held talks with U.S. retailers about carrying Craftsman tools. The New Britain, Conn.-based tool manufacturer, which owns a host of other popular brands like Dewalt and Porter-Cable, said it hopes to bring Craftsman to big-box stores for the first time and launch a “major push” into e-commerce.
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Sears will continue to sell Craftsman tools under a license from Stanley Black & Decker. The license will be royalty-free for the first 15 years.
The sale is expected to close during 2017.
Stanley Black & Decker also announced an expansion of its manufacturing footprint in America, saying it will open a new high-tech facility and increase employment at existing factories to accommodate Craftsman. CEO Jim Loree said the plan is consistent with Stanley Black & Decker’s strategy to “make where we sell.”
“While manufacturing in the U.S. is not always an obvious choice to some, it makes good business sense for us,” Loree told analysts during a conference call to discuss the Craftsman acquisition. “We know our end users generally like to buy products made in their own countries, especially professionals in the trades.”
The company has yet to say where the new factory will be located. Stanley Black & Decker noted that its manufacturing headcount has grown by 40% in the past three years at nearly 30 U.S. facilities, including 11 factories that make products for the tool and storage business.
Trade proposals from President-elect Donald Trump, specifically a potential tariff on products imported by the U.S., will further drive Stanley Black & Decker’s domestic manufacturing strategy.
“It’s going to be advisable to have more manufacturing in the U.S.,” Loree said.