Sears is selling its iconic Craftsman tool brand to Stanley Black & Decker for $900 million in another move to raise cash amid shrinking sales.
The deal will expand the distribution of Craftsman tools, just 10% of which are currently sold outside of Sears stores, to other channels including mobile and online. Sears will still be able to sell Craftsman-branded products royalty-free for 15 years after the deal’s closing.
“This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels,” Stanley CEO James M. Loree said in a news release.
Stanley Black & Decker will pay Sears $525 million in cash on an undisclosed closing date, $250 million three years after the deal has closed, and annual payments on new Stanley Black & Decker Craftsman sales for 15 years.
Craftsman had been rumored to fetch about $2 billion in a sale process that kicked off in May. The deal “essentially giv[es] consumers even more reasons to not visit Sears, which was once known for its extensive tools section,” TheStreet said.
But Sears CEO Eddie Lampert said the deal represents a significant step in the company’s transformation to a membership-focused business model. He called Stanley “a great owner that is committed to expanding Craftsman and helping it to reach its potential outside of its current channels.”
Loree estimated the brand could add about $100 million of revenue growth per year for the next 10 years. On news of the deal Thursday, Sears’ stock price rose more than 2% to $10.58.
Amid its cash crunch, Sears has been restructuring by getting rid of underperforming stores, reducing its dependence on categories that are struggling in its shops and making money from its real estate footprint.
The company has controlled the Craftsman brand for 90 years.
“The sale is truly the end of an era, as both Sears and Craftsman have been associated with American manufacturing and craftsmanship for almost a century,” Popular Mechanics said. “The brand and the department store that sells it are practically synonymous.”