Sears sells Craftsman brand

[kscarbel2]

Sears Buys Time With Craftsman Brand Sale, Store Closures

The Wall Street Journal  /  January 5, 2017

Cash-strapped retailer will sell its brand of tools to Stanley Black & Decker for about $900 million

Struggling retailer Sears Holdings Corp. has bought itself some breathing room through maneuvers that include the sale of its Craftsman brand for $900 million and the closure of 150 additional stores as it grapples with a prolonged sales slump and mounting losses.

Sears has suffered through several weak quarters and warned Thursday that same-store sales fell as much as 13% in November and December.

Over the past five years, Sears has booked $8.2 billion in cumulative losses.

The moves by Sears Holdings this week coupled with the injection of $1 billion in financing from its controlling shareholder and CEO, Edward Lampert, helped shares climb off recent lows and reassured suppliers, who had grown increasingly uneasy over the retailer’s prospects.

“Vendors had gotten really spooked,” said Gary Herwitz, a managing director of CoMetrics Partners, which advises companies that supply goods to Sears. “But now it seems that Sears bought themselves another year.”

Its shares, which traded above $142 in April 2007 after adjusting for subsequent spinoffs, fell to a low of $8 last week. On Thursday, the stock was up 0.3% to $10.39 as of 4 p.m. trading.

Sears has been cutting spending and selling off real estate to fund its operations, but its existing locations continue to struggle as shoppers spend more online and at other chains such as Wal-Mart and Target.

Jim Loree, chief executive of Stanley Black & Decker Inc., which is buying Craftsman, acknowledged the risks on a conference call, particularly since 90% of Craftsman’s sales come from Sears-related stores. He said the company structured the deal to minimize its risks by assuming no contractual Sears credit risk and no obligation to supply Sears beyond current levels. The retailer bought Craftsman in 1927 for $500.

“Eddie Lampert and his team at Sears Holdings have a compelling vision for the future of Sears, but they also have their share of challenges so there cannot be complete certainty about the future of Sears and what direction it might take,” Mr. Loree said.

Sears will receive $525 million when the deal closes, $250 million after three years, plus annual payments over 15 years.

Sears also said it would continue to shrink by closing 108 Kmart and 42 Sears stores, including the original Kmart location that opened in Garden City, Mich., in 1962. Over the past decade, Sears has closed, sold or spun off more than 2,000 stores.

Lampert, a hedge-fund manager, took control of Kmart out of a bankruptcy proceeding and merged it with Sears, Roebuck & Co. in 2005. But the two retail chains, which had long been hampered by outdated stores and inefficient operations, have continued to languish despite Lampert’s efforts to spend more on technology and introduce services such as buy online, pick up in store.

His firm owns more than 50% of the company’s shares and is a large creditor.

Lampert said this week many of the stores that Sears will close this year have struggled with their financial performance but the company had kept them open to maintain local jobs and in hopes that they would rebound.

The CEO also has been keeping the company afloat in recent years with asset sales and a series of loans. On Wednesday, affiliates of his hedge fund lent Sears $500 million backed by 46 real estate properties. That followed a $500 million secured letter of credit obtained the prior week. More asset sales are in the works. Sears said Thursday that its board has established a special committee to sell real estate with the goal of raising over $1 billion.

It also has been exploring strategic options for its Kenmore appliance and DieHard battery brands. But unless Sears’s retail business returns to profitability, Mr. Lampert will run out of assets to sell.

“There can be no illusion that there is any way to support a viable retail strategy,” said Mark Cohen, a former CEO of Sears Canada Inc., who left in 2004 over strategic differences and is now a professor at Columbia University.

Lampert has long stated that his goal is to return Sears to profitability. At the same time, he has limited investments in physical stores, leaving many Sears and Kmart locations looking outdated. Sears has also been more aggressive than its peers in reducing inventory.

According to an analysis by market research firm Haynes & Co., which visited stores in a dozen markets across the country during the week between Christmas and New Year’s, Sears had about 55% of the apparel on the floor that J.C. Penney carried. On the appliance front, Sears stocked double the number of refrigerator, microwave and washer/dryer models as Penney, which returned to the category in 2016.

“By reducing our inventory investment and our payables, we have decreased the level of vendor support needed to run our business,” Sears said.

Sears’s finance chief, Jason Holler, said last month that the retailer is focusing on big-ticket items, where it does better, while reducing its presence in apparel.

Sears spent $348 million to build inventory heading into the recently completed holiday season, compared with more than $1 billion last year. By comparison, Penney, which has half the annual revenue, spent roughly $700 million.

[1958 F.W.D.]

Bah. 

Craftsman has gone down the shitter the last 5 years. When is the last time you found a Craftsman tool made in the USA? I think I may have even started a thread in here to bitch about it when I was shopping for tools for Large for his Birthday or Christmas a few years ago???

[blackdog2]

Stanley started in Connecticut started in 1843 in New Britian and still has some presence, pencil sharpen stapler in the corporate office. They were going to build over the line but Trump changed their mind. But they do own 50 + tool company's not to shabby came along way for a guy named Stanush-Stash .

[kscarbel2]

I don't know when Danaher's Apex Tool Group began producing Craftsman, but production shifted overseas in 2010.

That said, Danaher sold Apex to Bain Capital in 2012.

Apex's brands include K-D Tool, GearWrench, and Jacob's drill chucks.

Danaher also had Matco, but not under the Apex subsidiary, and spun it off in 2016 along with Jacobs Vehicle Systems and Gilbarco Veeder-Root into a new business called Fortive.

[fxfymn]

No different than many of the old line US made tool builders such as Porter-Cable and Delta that were bought out. They will make a cheaper product that will live off of the legacy of the brand until it ultimately fades into history.

The real shame is that Craftsman filled a niche for the home mechanic that no else seems to be able to do. They made affordable, well made tools that may not be as well made as Snap-On, but served perfectly well for most of us. And their warranty was legendary. Time to start hitting yard sales and auctions to find the stuff that's still out there.

[DailyDiesel]

It's too bad about Sears and K-Mart but the times have really passed them by. Everything they sell can be found at other retailers with better stock and prices. Once you add online shopping to the mix it becomes a very dire situation.

The Sears mail order catalog was the Amazon of the day, you could literally buy everything and anything from them, including homes!

[Red Horse]

6 hours ago, blackdog2 said:

Stanley started in Connecticut started in 1843 in New Britian and still has some presence, pencil sharpen stapler in the corporate office. They were going to build over the line but Trump changed their mind. But they do own 50 + tool company's not to shabby came along way for a guy named Stanush-Stash .

I think the only thing Stanley still makes in New Britain are steel tapes.  Sad.

You yuking it up or was " Stanley" a Polish immigrant???

I think Stanley also just bought the tool line that was aquired by Newell-Rubbermaid.

[Brocky]

Last I knew the original S.S. Kresge store building still stands just off US 209 south of Stroudsburg PA near the village of Kresgeville PA..

[mowerman]

Kind of sad as a kid that was the store baby everybody went there and bought everything there I've been buying Craftsman tools since 1970 haven't really bought any tools at all for quite a while last I heard Craftsman was producing both Taiwan and American you could buy your choice I think it was the last store but I heard all American products as a big part of why they failed I think for the most part people would prefer to buy Taiwan Imports are 1/3 the price especially if they do the same job me I would prefer to pay more and see that somebody is working over here.....bob

[Dirtymilkman]

Didn't Stanley go broke a few years ago? 

[BillyT]

MY wife retired from Sears after 25 years we watched its incremental demise for years! Their first mistake seemed to be their abandonment of their core customer base which was very loyal! This was of course the older customer ( middle age and older) They tried to sell clothing and other lines to younger people and failed miserably ! And of course they merged with arguably the worst managed "big box" store in existence The legendary K Mart! Lol  They have actually lasted longer than would have seemed possible! They did all the usual things a company in its "death throes" does, cut commissions on salespeople, which lowered morale, hence performance, went to the minimum number of employees,which pissed off the customers! Amazingly,the local store had a few competent employees but they seem to have left. The last time I was in the tool dept every power tool was Chinese made,with the exception of the hand tools! A couple of years ago they tried to get the managers to clean the bathrooms! My wife and the others didn't actually "refuse" to do this,that could get you fired! They just didn't do it! After a couple weeks Sears brought  back the crew of " green card workers"  That had previously cleaned the bathrooms! Lol!

[BillyT]

The last time I was doing one of my little surveys I noticed that Bosch had bought Black and Decker and a couple other well known brands possibly Dremel and they are ALL made in China and Mexico! I know most of you members are welders,well Hoberts Welding machines and Lincoln's are American made but Lincoln's torches and regulators are made in Poland! Hobart torches and regulators are made in China! They resemble Victor and use Victor tips and accessories! Lincoln seems to have bought Harris as their cartons say lincoln Harris! So there goes the cadillac and Mercedes of cutting and welding equipment to China and Poland!

[mowerman]

Oh brother thanks for the heads up not exciting news...Personally I don't even bother checking the labels anymore....Just assume it came over in a china can.. . Terrible.....As for Sears I think they just didn't go with the flow.and keep up with the times....But then again the help from our era....Are all retired anyway .... Lol...So la de da.....bob

[mowerman]

You know my wife bought me a set of combo wrenches for Christmas couple years ago and thier Stanley......China import....So is my thermos bottle... Both real good products but too bad American workers can get a shake of that action.....bob
 

[BAD DOG]

When I was a kid My parents and grandparent always went to Sears for all their big ticket items around home . And in the fall the Wish book always came in the mail and we'd be making out our Christmas which list  mainly out of it . Used to be a big deal when we'd get to go on an occasional trip to the city shopping  usually. Always included a trip to sears . But I've found about the last 15 years Sears stores over here in Canada suck they've totally went to shit !  They used to sell anything and everything and it was always good stuff but anymore it's just junk !  Last year I took my mother to the city to do here Christmas shopping and we went into sears the store is practically  bare now they don't stick anything or carry anything in general anymore and even there catalogue outlets they used to have in every small town are dying off . I can't se them being in business for too much longer myself . 

[mowerman]

I guess it's just a blast from the past like drive in resterants and rollers skating waitresses. ... Remember everybody would get excited to see the new Sears catalog every year....bob

[hicrop10]

I liked to know what percent of their business was made up from the craftsman brand.This may be the rapid start of the demise of Sears.

[1958 F.W.D.]

14 hours ago, DailyDiesel said:

The Sears mail order catalog was the Amazon of the day, you could literally buy everything and anything from them, including homes!

The "Mountainview" Neighborhood in Hellertown, Pa where I live is all Sears & Roebuck houses that were built by Bethlehem Steel for their workers. I believe that if you worked for Beth Steel,  you could sign on for a low-interest loan and purchase a lot and the house kit which would be delivered by rail at the local siding. You would work your normal week and then one or two days (depending on your schedule) in a manpower pool helping everyone to build the houses. I think there are 300 +/- homes total. 

[Phase 1]

Craftsman won't be gone, the tools will still be sold in Sears stores, only owned by a different company. The bad part is that there are fewer and fewer Sears stores left.

As said you could get almost anything at Sears. Near here some years back, a family bought an empty home for a summer place. They needed everything for the home, which would have been a big job to aquire. So they contacted Sears and they took care of everything. The Sears vehicles came and put in the drapes and carpet. Brought all the furniture and appliances, TV and stereo systems, and installed everything. Towels and bedding, pots and pans and utensils - everything and anything that would be in a house was supplied by Sears.

[Underdog]

Craftsman tools are available in other places, too. My local ACE hardware store sells craftsman tools.

[blackdog2]

21 hours ago, Red Horse said:

I think the only thing Stanley still makes in New Britain are steel tapes.  Sad.

You yuking it up or was " Stanley" a Polish immigrant???

I think Stanley also just bought the tool line that was aquired by Newell-Rubbermaid.

You ll laugh their is about 2-3 loads of scrap of tape measures a week cumming in to Gateway terminal it adds color to the pile ,They farm a lot out to smaller company's 

[other dog]

21 hours ago, mowerman said:

I guess it's just a blast from the past like drive in resterants and rollers skating waitresses. ... Remember everybody would get excited to see the new Sears catalog every year....bob
 

Yeah, they had the "Fall and Winter" catalog, the Christmas catalog, and then you'd get the "Spring and Summer" one, and they had just about anything you could think of. My Ma would order our school clothes from the Sears catalog.

[BillyT]

The Craftsman Houses,which were a kit that you could build yourself or have built,were a basic economical "starter home" Today the originals are "high dollar" in Tampa Bay! There a couple of new Craftsman clones in my neighborhood,I always liked the way they look,but they cost as much as any new middle class home today! As a couple members mentioned you could buy almost anything at Sears even a little Automobile! Almost like a crosley,for those of you old enough to remember those!

[41chevy]

7 hours ago, Phase 1 said:

Craftsman won't be gone, the tools will still be sold in Sears stores, only owned by a different company. The bad part is that there are fewer and fewer Sears stores left.

As said you could get almost anything at Sears. Near here some years back, a family bought an empty home for a summer place. They needed everything for the home, which would have been a big job to aquire. So they contacted Sears and they took care of everything. The Sears vehicles came and put in the drapes and carpet. Brought all the furniture and appliances, TV and stereo systems, and installed everything. Towels and bedding, pots and pans and utensils - everything and anything that would be in a house was supplied by Sears.

A friend and his wife are Sears  nuts. The live in a 1941 SEARS "kit" house,  a  1957 SEARS /All State branded Cushman scooter and just finished restoring a 1953 SEARS/All State branded Henry J car. 

I still use a ton of Craftsman hand tools I got for Christmas over 50 years ago.

[Underdog]

A friend and his wife are Sears  nuts. The live in a 1941 SEARS "kit" house,  a  1957 SEARS /All State branded Cushman scooter and just finished restoring a 1953 SEARS/All State branded Henry J car. 
I still use a ton of Craftsman hand tools I got for Christmas over 50 years ago.

The bulk of my hand tools are the original Craftsman Mechanic's tool set(800 piece I believe) I bought from the catalog in 1988. I still use the top chest, the bottom has been upsized and side cabinets added over the years.