© Reuters / Maria Alejandra Cardona
FILE PHOTO: Shoppers look for Black Friday sale items at a Sears store in Cutler Bay
NEW YORK (Reuters) – Sears is exploring the sale of its home improvement business due to the interest of potential suitors as private equity firms, people familiar with the matter said on Wednesday.
The struggling US retailer’s Sears Home Services division has emerged as a coveted asset during the COVID-19 pandemic, as consumers embark on renovations while staying home.
The division is one of the few department store crown jewels after its bankruptcy in 2018 and the sale of $ 5.2 billion to hedge fund manager Eddie Lampert, who was already its largest shareholder and creditor.
Transformco, the owner of the Sears and Kmart retail chains, could raise at least $ 1 billion by divesting in the home improvement business, the sources said. Sears has turned to investment bankers at Guggenheim Securities LLC to explore the sale of the business, the sources said.
Transformco could also sell a stake in Sears Home Services and retain part of the business’s ownership, one of the sources said, warning that a deal may not come to a deal.
The sources asked not to be identified because the matter is confidential. Transformco and Guggenheim declined to comment.
Sears Home Services handles jobs such as appliance repair, vinyl siding replacement, roofing, and kitchen remodeling.
Costco Wholesale Corp earlier this year acquired the logistics business of Sears Innovel Solutions for $ 1 billion, allowing the company to refinance its debts. Last year, Sears also sold its DieHard battery brand to Advance Auto Parts for $ 200 million.
Lampert, once CEO and President of Sears, has been thinning out the store operator for years. When it emerged from bankruptcy in early 2019, the company had 425 Sears and Kmart locations. At the end of last year, the count had dropped to 182, Reuters reported.
In April, Sears temporarily closed all of its stores in response to the coronavirus pandemic. The company plans to permanently close some locations in the coming months, bringing the total number of stores, now around 90, to around 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)
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