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 (NASDAQ:RSTO) moment to shine.

Just days after the struggling home-decor retailer announced a private-equity buyout bid, Sears (NASDAQ:SHLD) has stepped into the picture after acquiring a nearly 14% stake in Restoration Hardware.

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 (NYSE:PIR).

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.
  • GameStop (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,

Rick Munarriz

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Longtime Fool contributor Rick Munarriz recommends windshield wiper fluid when trying to look back. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.