At a tough time for Sears Holdings, the beleaguered retailer has collected some much-needed cash — by selling one of its most beloved brands.
The company said on Thursday that it had sold its Craftsman line of tools to Stanley Black & Decker for at least $775 million, part of an effort to raise cash as it continues to grapple with troubles in its business.
For Sears, selling one of its classic brands — one it created nearly a century ago — is the latest move to bolster its balance sheet during a prolonged sales slump. The company’s chairman and chief executive, Edward S. Lampert, has struggled for years with ways to help the company, as much through esoteric financial maneuvers as through operational fixes.
The company said on Thursday that comparable-store sales at its Sears and Kmart units for November and December were down at least 12 percent.
That kind of poor performance has battered Sears’s financial health. As of Oct. 29, the retailer said that it had $258 million in cash and equivalents on hand, compared with $3.1 billion in long-term debt. Its market value on Thursday morning, by point of comparison, stood at $1.2 billion even after a jump in its stock price after the Craftsman news.
On Thursday, Sears listed its latest initiatives aimed at shoring up its cash position, from closing 150 more stores to raising up to $1 billion through both a $500 million loan backed by its real estate and a previously announced loan from Mr. Lampert’s hedge fund.
“We are taking strong, decisive actions today to stabilize the company and improve our financial flexibility in what remains a challenging retail environment,” Mr. Lampert, who is also Sears’s biggest shareholder, said in a statement. “We are committed to improving short-term operating performance in order to achieve our long-term transformation.”
For its part, Stanley Black & Decker will get the opportunity to sell Craftsman tools in even more outlets. At the moment, only 10 percent of the product lineup is sold outside Sears stores, mostly in select retailers like Ace Hardware.
“Craftsman is a legendary American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value,” James M. Loree, Stanley Black & Decker’s chief executive, said. “This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels.”
Mr. Loree, nodding to the current political environment, also added that Stanley Black & Decker planned to add more American manufacturing jobs. He said his company had already increased its manufacturing job count in the country by 40 percent over the last three years.
Under the terms of the deal, Stanley Black & Decker will pay $525 million when the deal closes and an additional $250 million at the end of the third year after closing. Sears will also collect a percentage of new Craftsman sales for 15 years after the deal closes. All told, the transaction is now valued at about $900 million.
Sears will continue to sell Craftsman products in its stores under a licensing agreement that is free for the first 15 years. After that, the chain will pay Stanley Black & Decker a 3 percent fee.
The deal is expected to close by the end of the year.