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Too Bad Sears Holdings Doesn't Do This More Often

Source: Sears Holdings.

If Sears Holdings (NASDAQ: SHLD  ) did this more often, shoppers might not shun its stores and investors wouldn't abhor its stock. I'm talking about its creative new Craftsman tool promotion that the old-school department store is wrapping around Father's Day -- in bacon-inspired paper!

The Sears promotion that ends July 12  involves "MAKEcation," which the company describes as a "legendary vacation where making things with your hands takes center stage." Built around its popular Craftsman tools, the contest awards winners a four-day Labor Day weekend trip to Lake Arrowhead in California that will feature actor and comedian Rob Riggle hosting workshops on woodworking, blacksmithing, cigar rolling, barbecuing, and even whiskey-making. Insert Tim Allen Home Improvement grunt here.

Now that Sears has jettisoned its profitable Lands' End division and plans to do the same with Sears Canada, the retailer has less than a handful of meaningful brands around which it can stage a resurrection. Craftsman tools is one, along with Kenmore appliances, DieHard batteries, and its auto services unit that Sears is also mulling whether to sell or spin off.

Sears doesn't break out how any of these brands perform individually, so we'll need to look at its hardlines segment -- consisting of appliances, tools, electronics, auto, lawn and garden products, etc. -- in which sales are declining just as they have throughout the chain, down 5.7% in the first quarter. That was the least bad performance of any of the Sears groups, though sales were also down 18% for all of 2013, which doesn't bode well for the future.

The Craftsman brand wasn't helped by Sears CEO Eddie Lampert's cost-cutting initiatives, which saw manufacturing of the tools sent to China, ending the company's "Made in America" reputation. While the Craftsman brand had a loyal following for decades because of it (along with the lifetime replacement warranty for its hand tools), Sears should be cut some slack here given that a number of its competitors have done the same without similar blowback.

While gear heads and garage guys will argue over whether Porter-Cable, Mac Tools, or Stanley makes the best tools, few probably realize that Stanley Black & Decker (NYSE: SWK  ) owns all of them. In February 2013, it purchased a 60% stake in Chinese tool manufacturer Jiangsu Guoqiang Tools, from which it sources a good portion of its tools. Furthermore, its popular DeWalt brand was built for many years in Mexico, though last November it began again producing at least some tools in North Carolina, even as materials used in their manufacture are still sourced globally.

Rebuilding the Craftsman brand ought to be a top priority for Sears (along with stopping Kenmore's slide as a top-name appliance maker, another area of concern), and the MAKEcation is a fun vehicle for doing so. Yet it must be recognized that cute marketing like this -- even if it is bacon-wrapped -- only goes so far. Kmart recently won an award for its hilarious "Ship My Pants" TV commercial, but that did little to stop the evisceration of sales at the chain. Kmart revenue tumbled 15% last year as comps fell 3.6%.

In short, the campaign is only a start to what needs to be done to make Sears Holdings a viable investment again. I'm not counting on it, as there seems to be little real interest in salvaging the retailer, but if Lampert could string together more such winning plans, maybe he could even make a believer out of me.

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Rich Duprey

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.


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Related Tickers

8/28/2015 4:00 PM
SHLD $27.30 Up +0.37 +1.37%
Sears Holdings CAPS Rating: *
SWK $100.50 Down -0.23 -0.23%
Stanley Black & De… CAPS Rating: ****