Long beleaguered retailer Sears announced in May that it was looking for ways to convert its iconic private brands Craftsman, Kenmore and DieHard into cash. In a deal announced Thursday tool behemoth Stanley Black & Decker will pay $525 million upon closing and another $250 million after three years. Stanley will pay Sears a percentage of its new sales of Craftsman products for 15 years, and during that time, Sears will continue to sell Craftsman tools royalty-free. Sears estimates the deal could exceed $1 billion.
The sale simultaneously demonstrates the value of private brands for retailers and the inability of retailers to grasp that value. Without Craftsman, Kenmore, and Diehard Sears will struggle to be little more than an irrelevant 1980s department store.
The move spells the death of the long-running private brand and hopefully its resurrection as a national brand unshackled from Sears and Kmart.
Craftsman currently includes power tools such as circular saws and drills and hand held and automotive tools such as wrenches and screwdrivers not to mention outdoor power equipment like lawn mowers, string trimmers, and leaf blowers. As of September, Craftsman accounted for the largest share of the hand tools and accessories market by dollar share, with about 26.6%.
Stanley Black & Decker owned brands include Stanley, Black+Decker, Dewalt and Porter-Cable. The Sears deal is their second agreement in the past three months. Stanley agreed to buy Newell Brands’ tool business for $1.95 billion in October, adding Irwin and Lenox to its portfolio of brands. They will undoubtedly dominate the tool market.