FILE PHOTO: Shoppers are seen during Black Friday sales at a Sears store in Cutler Bay, Florida, U.S. November 29, 2019. REUTERS/Maria Alejandra Cardona
July 1, 2020
By Jessica DiNapoli and Mike Spector
NEW YORK (Reuters) – Sears is exploring a sale of its home improvement business following interest from potential suitors such as private equity firms, people familiar with the matter said on Wednesday.
The struggling U.S. retailer’s Sears Home Services division has emerged as a coveted asset during the COVID-19 pandemic, as consumers embark on renovations while they stay home.
The division is one of the department store operator’s few crown jewels following its bankruptcy in 2018 and $5.2 billion sale to hedge fund manager Eddie Lampert, who was already its biggest shareholder and creditor.
Transformco, the owner of the Sears and Kmart retail chains, could raise at least $1 billion by divesting the home improvement business, the sources said. Sears has tapped investment bankers at Guggenheim Securities LLC to explore selling the business, the sources said.
Transformco could also sell a stake in Sears Home Services and retain some ownership of the business, one of the sources said, cautioning that a deal may not come together at all.
The sources asked not to be identified because the matter is confidential. Transformco and Guggenheim declined to comment.
Sears Home Services handles work such as appliance repair, replacement of vinyl siding, roofing and kitchen remodeling.
Costco Wholesale Corp <COST.O> earlier this year acquired Sears’ logistics business Innovel Solutions for $1 billion, allowing the company to refinance its debts. Sears last year also sold its DieHard battery brand to Advance Auto Parts <AAP.N> for $200 million.
Lampert, once Sears’ CEO and chairman, has been slimming down the department store operator for years. When it exited bankruptcy in early 2019, the company had 425 Sears and Kmart locations. By late last year, the count was down to 182, Reuters reported.
In April, Sears temporarily closed all its stores in response to the coronavirus pandemic. The company plans to permanently close some locations in the months ahead, bringing its total store count, now around 90, to about 65, according to a source familiar with the matter.
(Reporting by Jessica DiNapoli and Mike Spector in New York; Additional reporting by Rebecca Spalding; Editing by Leslie Adler)
