January 30, 2017, 11:37 AM

Stanley Black & Decker crafts a web strategy for Sears’ Craftsman brand

Having agreed to acquire the iconic tools brand, Stanley Black & Decker is preparing to promote and sell Craftsman products largely through e-commerce, CEO James Loree says.

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Stanley Black & Decker Inc. finished 2016 with its strongest sales and profits in its Tools & Storage products division, and now it’s preparing to extend that performance with a new focus on e-commerce sales of tools to repair shops, industrial customers and individual consumers.

The e-commerce focus stems from Stanley’s plans for polishing off the Craftsman tools brand from Sears Holdings Corp. that Stanley expects to begin manufacturing and selling this year. In a deal valued at about $900 million, Sears has agreed to sell Stanley the exclusive rights to “develop, manufacture and sell Craftsman brand” products worldwide outside of Sears Holdings’ own selling channels, Stanley CEO James Loree says.

Under the terms of the deal, Stanley will pay Sears $525 million when the deal closes, another $325 million in the third year after the closing, and a percentage of Craftsman sales for 15 years—amounting to a total purchase price of about $900 million. The companies say they expect the deal to close later this year.

Stanley figures it can grow annual sales of Craftsman tools from the $100 million it expects from the start to about $1 billion in a decade, Loree said on a conference call with stock analysts last week, according to transcript of the call provided by Seeking Alpha. Craftsman tools—known for their lifetime warranty that Stanley says it will continue to honor—range from screwdrivers and power tools to large tool cabinets that professional mechanics and other tradespeople use in repair and maintenance facilities.  

And the channel he’ll mostly rely on to build those Craftsman sales is e-commerce, Loree says. Stanley expects to “partner with a large e-commerce company and make it available broadly through e-commerce,” he said on the conference call. “And we think that’s an exciting growth opportunity.” He added that an e-commerce company he has been in talks with has said “Craftsman power tools” is the most popular search term on its website for which it has had no matching products.

Stanley also has a pending agreement with Newell Brands Inc., the maker of Rubbermaid janitorial products and Parker pens along with a wide range of business, industrial and consumer products, to acquire Newell’s Tools business for $1.95 billion. That deal is expected to close in the current quarter.

Newell sells tool brands including Irwin and Lenox, to professionals in the building and repair trades. Those sites don’t offer online purchasing, though they let customers search for merchants that carry the Irwin or Lenox brands and link to any available e-commerce sites such as from Fastenal and Steiner Electric. Newell also operates a B2B web portal, built on technology from SAP SE, where dealers and distributors can place orders for Newell’s products.

Stanley doesn’t break out figures on e-commerce sales. It reported net   sales of $2.920 billion for the fourth quarter ended Dec. 31, up 2.6% from $2.845 billion a year earlier, and full-year revenue of $11.407 billion, up 2.1% from $11.172 billion. Net earnings were $255.5 million for the quarter, down 3.8%, and $965.3 million for the year, up 9.2%.

Most of the company’s sales are in its Tools & Storage segment, which posted full-year net sales of $7.469 billion, up 4.6% from $7.141 billion, as the segment’s operating profit increased 8.3% to $1.267 billion from $1.170 billion. In addition to tools and storage systems for tradespeople, the Tools & Storage division includes storage systems for manufacturing, healthcare, institutional and government facilities.

Stanley also operates two other segments: Security, which provides software and hardware for managing building security; and Industrial, which sells fasteners, adhesives and equipment used in various industries including automotive manufacturing, construction and oil-and-gas pipelines.

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