Sears Takes Another Blow

Founded in 1886 by a Railroad Station Agent who decided to sell a shipment of unwanted watches, Sears Roebuck & Company would go on to become America’s largest retailer. In a time when very few American’s had access to a telephone, Sear’s catalog revolutionized American retail. Through the 20th century Sears was a component of the Dow Jones Industrial Average and in the eyes of many, “too big to fail”. Over the last few years Sears seems to have taken a heck of a crack at it though.

Each quarter the news seems to get worse and worse. In addition to losing a reported $6.4 billon in the last 3-1/2 years and $1 billion in the first half of 2014 alone, in September the company reportedly borrowed $400 million from CEO Eddie Lampert to get it through this Christmas season offering $500 million worth of collateral in return. Yesterday morning the Wall Street Journal reported that Sears shares fell 17% after a report last week that  Euler Hermes Group, a firm that insures suppliers against nonpayment, is canceling policyholder coverage on Sears and that several such providers for Sears suppliers are reducing their coverage limits. I don’t pretend to be a finance guy, but it certainly doesn’t look good for Sears.

So the big question to us is, in the seemingly inevitable scenario that Sears fails, what happens to Craftsman? It’s hard to say for sure, but it appears extremely unlikely Craftsman will go down with the ship. Craftsman, along with the Die Hard and Kenmore brands are owned by KCD IP, LLC, a special purpose entity created by Sears Holdings for securitization purposes, which according to Forbes, shields the brands from the failure of Sears Holdings Corp.

All that being said, we can feel pretty confident Craftsman isn’t going anywhere. The Craftsman brand alone is extremely valuable and with the right management, could easily stand on it’s own on the shelves at Cosco, Ace, and potentially many other retailers. As for warranty concerns, I can’t speculate as to how current tools would be handled but I would have to assume that in the same fashion as Ideal honored warranty on previous era tools after purchasing SK back in 2010, Craftsman’s warranty would remain.

All this is merely speculation, but it appears the time to start thinking about it may be upon us.

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Travis (Conductor562 on the Forums) is an Editor and Forum Administrator for Tools In Action. As a father of 4, he is an avid fixer off all things broken. He enjoys woodworking and restorations. While he enjoys all tools, he focuses primarily on hand tools. When he's not at work he can be found in his home shop working on something with lots of help from his 5 year apprentice Evan (aka Conductor Jr.).

9 COMMENTS

  1. We just had our local hardware store brand ACO hardware convert their stores over to ACE and they carry all sorts of brands like Dewalt, Milwaukee, and a Bunch of Craftsman. I think some one will buy the craftsman name. Do you think big box stores like Home Depot or Lowes would consider picking up the Craftsman name? I just wonder if they consider Husky and Kobalt as pretty well established by now. You could do something interesting with the name as bringing it back to be as American manufactured as possible while still being affordable.

    • I don’t think lowes would ever get rid of kobalt tools. Maybe Home Depot could get rid of husky and replace them with craftsman; the only reason that I say that is I was confused when Home Depot started the HDX tool line. Is Home Depot trying to get away from husky tools? If Home Depot didn’t want anything to do with craftsman maybe Menards. The only tool companies that come to my mind that could possibly buy craftsman hand tools and power tools would be Stanley Black and Decker, TTI or even Milwaukee tools.

      • Home Depot started the HDX line as an economy brand with Husky being their “premium” brand. It’s no different than Sears selling the Evolv brand (before that is was the Sears brand and before that it was Dunlap), Lowe’s Blue Hawk brand, etc, etc, etc,. Husky is an old name that goes back to the 20’s and it’s doubtful HD would phase it out in favor of a generic name when they own the Husky name outright anyway.

        I doubt very seriously the Craftsman name would be for sale. If Sears goes down you’ll likely see Craftsman at Wal-Mart or Target. But that’s just speculation

  2. Sear’s has been on the list of old companies that are next to go belly up for the last couple of years. Just a matter of time.

  3. That’s why there should never be any entity deemed to be too big to fail. As big as companies are now, none were anywhere near the size as a percentage of GDP as Sears was. Back in the day, Sears by itself was 1% of the GDP. That’s 1% of the entire US economy. No company even comes close to that today. If a company loses $1B in just half a year & no end in site, it deserves to go under. That’s the way free enterprise works, and for good reason. As sad as it would be for this native Chicagoan. Sears disrupted the economy with it’s crazy business model with mail order. Customers flocked to them. It forces innovation or leads to death. I’m sure they put plenty of companies out of business. With Home Depot and other HW competitors, Circuit City (where are they now) & Best Buy (where are they headed), eventually it was Sears that didn’t keep up. Now today’s disruptors are Internet e-tailers doing the same. Customers now flock to them. Now imagine if Sears was deemed too big to fail. Who makes that decision? Where does the money come from to keep it alive IE give them a bailout? What if you had no choice? What if you are forced to shop at Sears regardless of how bad the prices, services, products or buildings are? That’s an economic recipe for disaster and horrible for consumers. Good thing the government doesn’t work that way… Oh wait… hmmmmmmmm…

  4. Sears sucks and Craftsman sucks. People who buy craftsman are suckers paying big money for overpriced made in china nonsense. Riding on a name. Riding on a name, but Pure trash.

    People should understand that eddie lampert had ZERO INTENTIONS of ever making sears last. He loaned sears 400 million dollars of his OWN MONEY, and had the company he runs……SEARS……put up 500 million dollars worth of PRIME REAL ESTATE AS COLLATERAL.

    OF COURSE he wants sears to fail……..we must THINK, people. Why would any consumer (we, the people) support such deception and filth?

    • I’m not disagreeing with you John, but at the same time it makes me sad to see a once great company like Sears die. Walking through Sears today is just depressing. I remember as a kid I actually looked forward to going to Sears, but that was in the days before the internet.

      Sears really botched their shot at integrating their self into the online shopping landscape. Aside from a few items here and there (mostly the Western Forge made stuff), I really don’t think Craftsman has anything to offer a tool consumer at my level. You look back to the Craftsman catalogs of the 1950’s and 50’s and you see some impressive machines that even a professional carpenter or machinist could see himself using, now you just see “Made In China”, shake your head, and walk away.

      It may be true that the average consumer doesn’t care about COO, but I’d venture to say that the average consumer isn’t shopping at Sears anymore either.

  5. I grew up by Sears on 79th street. in Chicago. I remember as a boy, strolling through the isles of the store looking at all of the magnificent quality tools and dreaming of the day that I could be old enough to buy and use them. Unfortunately those “magnificent” tools are cheap Craftsman knock-offs. Sears once stood for quality, in a short time it will become a bittersweet memory of the past.

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