What is Happening to Craftsman Tools?
The news spread quickly through the motorhead community this week, when it was announced that Sears was selling its iconic Craftsman brand to Stanley.
The 90-year-old Craftsman brand of tools is found in millions of toolboxes nationwide. The tools have enjoyed a reputation for robust quality but the major reason for their longstanding popularity has been the brand’s lifetime warranty on most hand tools.
To be fully accurate, what a lot of people still think of as Sears & Roebuck is correctly known as Sears Holdings, and what a lot of people still think of as Stanley Tools is correctly known as Stanley Black & Decker. These days, Kmart is really the owner of Sears, and the original Stanley Tool Works merged with Black & Decker in 2010.
The Craftsman tool brand was trademarked by the Chicago-based Sears in 1927, and Craftsman tools remained available exclusively from Sears stores (and the old Sears & Roebuck catalog) for generations. But more recently Craftsman tools have been made more widely available, at Kmart, Ace Hardware, Grainger, and elsewhere. Sears, byt the way, was never a manufacturer of the tools, but instead used a variety of suppliers – including Stanley Tools – to make the products.
Although most car guys associate the Craftsman brand with the hand tools in their toolboxes, hand tools and power tools make up just 35 percent of Craftsman brand sales. Lawn and garden equipment (mowers, leaf blowers, et al) account for 40 percent of Craftsman sales, and the remaining 25 percent is made up of other items such as storage products and garage door openers. In the announcement of the sale it was not specified whether Stanley will alter the product mix, and interestingly the deal grants Sears the right to develop and source products with the Craftsman name for their retail stores.
Sears’ retail stores are seen by many to be an endangered species. The double-whammy of multiple store closings and this sale of an iconic brand is perceived widely as evidence of a dying company. But somewhat lost in the news is the fact that Craftsman products will continue to be available in Sears stores. Sears, in fact, has been granted a perpetual license to distribute Craftsman products.
Tools may appear, when one visits a Sears store, to be just one small portion of the retailer’s offerings, but this is no small potatoes deal. As the buyer, Stanley Black & Decker is making an initial payment to Sears Holdings of $525 million, followed by an additional $250 million after three years, and annual payments based upon sales growth through non-Sears channels for the next 15 years. The deal in total is estimated to be worth some $900 million.
The buyer is banking on increased retail distribution of the Craftsman brand and is predicting significant annual sales growth and an expansion of domestic manufacturing. For the seller, the deal provides a badly-needed influx of cash while allowing the iconic brand to remain in its stores.
Only time will tell if the Sears name will last, but for the foreseeable future at least, it appears that the Craftsman brand will endure.
Image Courtesy of Stanley Black & Decker.