The harder side of Sears
What's better than running a thriving retail establishment? The answer, of course, is running a struggling retail establishment. Just as the steak-rich but profit-poor Smith & Wollensky chain of upscale chophouses triggered a bidding war earlier this year, now it's Restoration Hardware's
Will Sears be making a higher buyout offer? This obviously isn't a passive investment in a chain that is on the cusp of disappearing into the private-equity realm. With its foot in the door, the department-store pioneer will quickly study the numbers to see if a bidding war is worth breaking into.
If so, it won't be the first time that Sears has tried to go upmarket through a beefy purchase. I'm not talking about Kmart here -- I said "upmarket," OK? I'm talking about its purchase of Lands' End five years ago. This would be along those lines. Restoration Hardware is a chain that could thrive under Sears' financial footing. It would also work as a store-within-a-store concept to upgrade the namesake chain's own home furnishings.
In other words, Sears has more to gain than a private-equity buyer. Let's watch how it goes. If Sears comes up empty, we'll see if it goes after another struggling player like Pier 1
Briefly in the news
And now, let's take a quick look at some of the other stories that shaped our week.
- Ready to curl up with a good e-book? Amazon.com
(NASDAQ:AMZN)introduced its Kindle electronic reader on Monday. The first batch sold out briskly, but is the market ready for a $399 reader? It has some cool perks, but do I really want to take a Kindle -- and a $10 downloaded e-book -- to the beach or on the bus? This is a $409 book I'd be carrying. If anyone can make this work, it'll be Amazon, but it's going to be an uphill climb.
(NYSE:GME)is my favorite bellwether for the video game industry. It's the top, pure, agnostic gauge of the sector. The company posted a great quarterly report but tempered expectations for the holiday season. Who are we kidding here? The consoles are coming through with attractive price cuts. New games like Viacom's (NYSE:VIA)Rock Band and Activision's (NASDAQ:ERTS)Guitar Hero III are winning non-gamers over at higher price points than typical software titles. I know I should listen to the bellwether, but I'm hearing cash-register bells in my head, instead.
Until next week, I remain,