Is Sears Phasing Out Craftsman Professional Tools

[SpiderGearsMan]

hf sure is eating into sears bottom line

 

[Danglerb]

Pure opinion, but when the economy started having the post Reagan dips, I think buying habits changed for a lot of people. All economic groups started looking for cheaper items, resulting in many long time successful retailers taking it in the shorts. Scams like buying old or damaged tools at garage sales and abusing the lifetime warranty became common. Those sowed the seeds, now we see the fruit.

Pure guess, controls are going to tighten up, returns will get more tracking and restrictions.

Sears needs to get its act together, Kmart was actually a much more organized company. Sears is making too many out and out mistakes.

 

[pipsters]

The lifetime warranty, while solidifying brand loyalty, has been at a tremendous cost to Sears. They instituted the "re-manufactured replacement" a few years ago to stem some of the cost, but it still hasn't helped the financial bleeding. Financial Analysts (who don't really care about tools) often suggested that the lifetime warranty had to go away, or Sears would. We may find out someday soon that they were right. Poor quality tools are not a wining recipe for Sears.

Read recently that the Craftsman tool line contributes something like $3 bil towards Sears $43 bil in yearly revenue.

I sincerely doubt that the lifetime tool warranty is what is dragging the company down. More like lack of management/horrible management, lack of vision, unwillingness to change with the times, increased competition, etc. Sears as a brand was known for a quality product (Craftsman, Kenmore, etc.) and that was their bread and butter, but many competitors have emerged since.

Simple fact of the matter is, sticking with US made product and US made prices won't work in todays environment. Sears, if serious about tools, would need to "re-tool" (hehe) their tool department and become more Harbor Freight like (in selection and prices) if they want to compete in the tool environment. I am continually blown away at the prices Harbor Freight and Northern Tool can sell product at and still make money.

 

[toolmaker1]

Were they actually called "Craftsman Professional"? If so, I apologize - I didn't ever see them branded that, only "Craftsman full-polish".

Regardless of that, Craftsman still isn't a Danaher brand, and never has been, and Danaher's marketing decisions in regards to Matco had no bearing on the Craftsman Pro wrenches being outsourced to China - that was due to the business failure of SK.

The outsourcing of the "Professional" wrenches (yes they are called that) had NOTHING to do with SK going bankrupt. Dahner has been making the pro wrenches in the US for many years. SK has not made the pro wrenches for a LOOONG time.

 

[pipsters]

Pure opinion, but when the economy started having the post Reagan dips, I think buying habits changed for a lot of people. All economic groups started looking for cheaper items, resulting in many long time successful retailers taking it in the shorts. Scams like buying old or damaged tools at garage sales and abusing the lifetime warranty became common. Those sowed the seeds, now we see the fruit.

Pure guess, controls are going to tighten up, returns will get more tracking and restrictions.

Sears needs to get its act together, Kmart was actually a much more organized company. Sears is making too many out and out mistakes.

My guess is a flood of decent quality imports coming to the US market is what caused folks to run toward them. In the 50's, 60's, 70's, and early 80's not much product outside of electronics was made overseas. 80's and early 90's is when it really started to pick up.

 

[Neuswede]

Read recently that the Craftsman tool line contributes something like $3 bil towards Sears $43 bil in yearly revenue.

I sincerely doubt that the lifetime tool warranty is what is dragging the company down. More like lack of management/horrible management, lack of vision, unwillingness to change with the times, increased competition, etc. Sears as a brand was known for a quality product (Craftsman, Kenmore, etc.) and that was their bread and butter, but many competitors have emerged since.

Simple fact of the matter is, sticking with US made product and US made prices won't work in todays environment. Sears, if serious about tools, would need to "re-tool" (hehe) their tool department and become more Harbor Freight like (in selection and prices) if they want to compete in the tool environment. I am continually blown away at the prices Harbor Freight and Northern Tool can sell product at and still make money.

My point was that the lifetime warranty was "at tremendous cost" to the company; not what was the main reason for the decline. Market conditions coupled with poor management decisions are the main causes; the warranty costs have continued to climb as reported by Wall Street Journal and Business Week first mentioned several years ago. $3 Billion (?) from Craftsman may be the gross revenue figure, but as reported by Bloomberg here, overall income has shrunk from $235 Million to only $133 Million in the past 4 years. Clicking the link will take you to a page and you can view financials back to 2008, including Cash Flow, Balance Sheet and Income Statement. I have found nothing in any line items that single out the warranty costs; it may be buried somewhere deep in a general ledger report.

Even if Craftsman was contributing a net 10% to operating revenue, it is hardly enough to make a business case to keep the doors open much longer. Sears will follow Montgomery Ward, and the best outcome is that they could sell off the brand while it may still be worth something.

Don't read this wrong...I am not bashing the tools; just the stock, the financials and the poor management performance, and in today's business climate, these types of companies don't live very long. Unfortunately, when Sears does fail, it more than likely will take a favorite tool brand with it.

 

[powertrip]

Were they actually called "Craftsman Professional"? If so, I apologize - I didn't ever see them branded that, only "Craftsman full-polish".

Regardless of that, Craftsman still isn't a Danaher brand, and never has been, and Danaher's marketing decisions in regards to Matco had no bearing on the Craftsman Pro wrenches being outsourced to China - that was due to the business failure of SK.

Yes. They are both stamped professional.

 

[bhclark]

I have to agree with Neuswede.
Sears will eventually (sooner than later) fail.
Even if they manage to sell off the "Craftsman" name brand (To Ace?), there is no guarantee that the "lifetime warranty" will transfer along with the name.

 

[pipsters]

My point was that the lifetime warranty was "at tremendous cost" to the company; not what was the main reason for the decline. Market conditions coupled with poor management decisions are the main causes; the warranty costs have continued to climb as reported by Wall Street Journal and Business Week first mentioned several years ago. $3 Billion (?) from Craftsman may be the gross revenue figure, but as reported by Bloomberg here, overall income has shrunk from $235 Million to only $133 Million in the past 4 years. Clicking the link will take you to a page and you can view financials back to 2008, including Cash Flow, Balance Sheet and Income Statement. I have found nothing in any line items that single out the warranty costs; it may be buried somewhere deep in a general ledger report.

Even if Craftsman was contributing a net 10% to operating revenue, it is hardly enough to make a business case to keep the doors open much longer. Sears will follow Montgomery Ward, and the best outcome is that they could sell off the brand while it may still be worth something.

Don't read this wrong...I am not bashing the tools; just the stock, the financials and the poor management performance, and in today's business climate, these types of companies don't live very long. Unfortunately, when Sears does fail, it more than likely will take a favorite tool brand with it.

You have no idea how much of a cost warranty exchanges are with that link. It doesn't even come close to scratching the surface of the Sears business. Most likely it is an insignificant drop in the bucket.

The most telling however is bigwigs from Sears writing memos stating the lifetime warranty is their most important selling point and honoring it is top priority.

 

[mooman]

Who writes memos anymore??

 

[byoungblood]

I have to agree with Neuswede.
Sears will eventually (sooner than later) fail.
Even if they manage to sell off the "Craftsman" name brand (To Ace?), there is no guarantee that the "lifetime warranty" will transfer along with the name.

Which is precisely why I'm warrantying anything Craftsman right now. Anything that has chrome flaking off of it, rusted, etc., I've been taking it in batches, unless it is older (I'm not going to warranty my grandfather's BE and Circle-H socket set!) Incidentally, I have a bunch of -V- and Easco made tools that has held up much better than the later Dahner made tools.

Given current trends whomever buys the Craftsman name will probably complete the off-shoring of production, and I'm not going to buy Chinese made Craftsman tools.

 

[WRX/Z28]

hf sure is eating into sears bottom line

Guessing from personal values/beliefs much?

The Craftsman/Sears customer is rarely the HF customer. Factored in with the fact that tools are less than 15% of sears overall business...

Personally, I think the fix for this is to buy things from sears.

Their clothing line is great for guys like us, Carhartt, Dickies, Levi's and such at good pricing. Appliances and such are 2nd to none. TV's and electronics are competitive, and I purchased my plasma from them at Best Buys sale pricing.

If Sears goes, I for one will be bummed. They are a true working man's store, and the only holdout of such still left...

I don't know about you guys, but the last thing I want is to find sears gone, and have to purchase all that stuff online sight unseen.

 

[kythri]

I have to agree with Neuswede.
Sears will eventually (sooner than later) fail.
Even if they manage to sell off the "Craftsman" name brand (To Ace?), there is no guarantee that the "lifetime warranty" will transfer along with the name.

This board really needs a "rolleyes" smiley.

 

[pipsters]

Guessing from personal values/beliefs much?

The HF tool isle is full of working men too, at least on M-F 8-5 or so. Lots of tradesmen there buying stuff, who probably used to go to Sears. Almost seems like Sears tools are for the homeowner these days.

 

[WRX/Z28]

The HF tool isle is full of working men too, at least on M-F 8-5 or so. Lots of tradesmen there buying stuff, who probably used to go to Sears. Almost seems like Sears tools are for the homeowner these days.

I'd actually say the opposite is true. HF seems to be full of DIY guys that have no idea what a quality tool is, and Sears tends to have a mix of DIY and Pro use guys.

I've yet to meet up with anyone at the top of the industry shopping in HF's tool aisles. Sears on the other hand...

When I'm in sears, I occaisionally see people swapping warranty tools for petty (cosmetic) reasons. In HF, people seem to be swapping defective tools every time i'm in there. I've even overheard conversations where customers demand to try something out before they take it home due to the number of times they've been back for the same problem.

I've bought a couple things from Harbor Freight. None of it impresses me save for the 5 drawer tool cart, and even that item has it's minor issues.

 

[powertrip]

Guessing from personal values/beliefs much?

The Craftsman/Sears customer is rarely the HF customer. Factored in with the fact that tools are less than 15% of sears overall business...

Personally, I think the fix for this is to buy things from sears.

Their clothing line is great for guys like us, Carhartt, Dickies, Levi's and such at good pricing. Appliances and such are 2nd to none. TV's and electronics are competitive, and I purchased my plasma from them at Best Buys sale pricing.

If Sears goes, I for one will be bummed. They are a true working man's store, and the only holdout of such still left...

I don't know about you guys, but the last thing I want is to find sears gone, and have to purchase all that stuff online sight unseen.

Agreed!!!

 

[pipsters]

I'd actually say the opposite is true. HF seems to be full of DIY guys that have no idea what a quality tool is, and Sears tends to have a mix of DIY and Pro use guys.

That's funny because honestly I don't think I've ever seen anyone else in my two Sears stores actually buying tools. Lawnmowers and outdoor equipment but not tools. And over the past 6 months I was in/out of there a lot, enough that the old guys working there know me on a first name basis!!! (I'm not proud of that BTW!)

 

[WRX/Z28]

I travel a lot for work, and I stop in sears and other tools stores along the way to check out clearance sections and such, and to kill time between jobs. Every store I stop in from Long Island NY, to NJ, to Delaware, to eastern PA always have plenty of customers in the tool section.

The store closest to me never has a free tool guy, I always end up having to wait if I want something from the lockup cases.

 

[warmpancakes]

sears is not going broke Id be willing to wager they have 100s of billions of dollars in property value, Not to mention sears back charges the vendor for the warranty item, if they take a screwdriver back under warranty whom ever they buy them from is back charged

 

[pipsters]

sears is not going broke Id be willing to wager they have 100s of billions of dollars in property value, Not to mention sears back charges the vendor for the warranty item, if they take a screwdriver back under warranty whom ever they buy them from is back charged

Logically, that doesn't make any sense.

There are many vendors that no longer are in existence today that made tools for Sears.

The warranty is Sears warranty not a manufacturer warranty. The only time Danaher eats it is when you get a kit you bought online and call their 800 # and they drop ship you some pieces.

 

[otis66]

That's funny because honestly I don't think I've ever seen anyone else in my two Sears stores actually buying tools. Lawnmowers and outdoor equipment but not tools. And over the past 6 months I was in/out of there a lot, enough that the old guys working there know me on a first name basis!!! (I'm not proud of that BTW!)

And no one ever has the key to open the tool case. It takes at least 20min more to find the only employee with the key to open the tool display case.

 

[Neuswede]

You have no idea how much of a cost warranty exchanges are with that link. It doesn't even come close to scratching the surface of the Sears business. Most likely it is an insignificant drop in the bucket.

The most telling however is bigwigs from Sears writing memos stating the lifetime warranty is their most important selling point and honoring it is top priority.

If you re-read my prior post, I stated that "I have found nothing in any line items that single out the warranty costs; it may be buried somewhere deep in a general ledger report." As for "scratching the surface, I'd say a Profit & Loss Statement does in fact go directly to the core of the business; that's why we have them. As I stated earlier, the share price is down more than $100 per share, and profits have backslid for years, to only $133 million across all divisions (Sears Holdings includes all divisions). Since being acquired by hedge fund executive Edward Lampert, Sears and K-Mart have gone nowhere.
Remember Brand Central and The Softer Side of Sears? They're dead.

And on the point of Sears having billions in real estate value, they really don't. Every store I have ever visited is in a mall or strip plaza, which means long-term leases; in fact they never owned the Sears Tower in Chicago. They were the major tenant in that building until 1992 when they relocated to the suburbs. The naming rights expired in 2003 but it wasn't until 2009 when UK insurance broker Willis became a major tenant and bought the naming rights to change the name (No, it wasn't changed for Bruce Willis).

As reported by Forbes, Bloomberg and others in the know, Sears has been in trouble for awhile; they need a direction and a winning game plan (or a better management team?). Their stock is tanking and the holidays are right around the corner, so for them, it's game time. Fortunately, Sears has not made the Business Insider 10 Companies to Fail list, yet.

As said earlier, buying from Sears helps their cause, but it won't fix all of their problems. I have never found myself in a position to decide between a Sears tool and a HF tool; If Sears has a quality USA tool, that's what I buy more times than not.

 

[SpiderGearsMan]

Pure opinion, but when the economy started having the post Reagan dips, I think buying habits changed for a lot of people. All economic groups started looking for cheaper items, resulting in many long time successful retailers taking it in the shorts. Scams like buying old or damaged tools at garage sales and abusing the lifetime warranty became common. Those sowed the seeds, now we see the fruit.

Pure guess, controls are going to tighten up, returns will get more tracking and restrictions.

Sears needs to get its act together, Kmart was actually a much more organized company. Sears is making too many out and out mistakes.

ahh Reagan left office 22 years ago

 

[warmpancakes]

Logically, that doesn't make any sense.

There are many vendors that no longer are in existence today that made tools for Sears.

The warranty is Sears warranty not a manufacturer warranty. The only time Danaher eats it is when you get a kit you bought online and call their 800 # and they drop ship you some pieces.

every company works this way you buy a car the alternator dies the supplies is back charged for the warranty, possibly when sears buys 1 million screwdrivers they are shipped 250k extra for free,
if sears wasnt making money from tools they wouldnt be selling them. Just yesterday I bought 3 batteries at 80% off and Im willing to bet there was still profit on the item

 

[Neuswede]

every company works this way you buy a car the alternator dies the supplies is back charged for the warranty, possibly when sears buys 1 million screwdrivers they are shipped 250k extra for free,
if sears wasnt making money from tools they wouldnt be selling them. Just yesterday I bought 3 batteries at 80% off and Im willing to bet there was still profit on the item

I think we can agree that they are making some money on the sale of tools, as evidenced by their most recent announcement to sell tools thru Costco Warehouses, however with tool sales only generating less than 7% (.069%) of gross revenue (not net income), they aren't making nearly enough to justify their retail stores' footprint. If you no longer need to go to a Sears store to buy Craftsman, which is the path they are creating with deals with Menard's, Ace and now Costco, in-store sales will continue to trend downward. On $43 billion (with a "B") in gross revenue, they are only turning out a dismal $133 million (with an "M") profit, down from nearly $853 million 2008.

So hopefully while we can agree that they are making some money, I think based upon the numbers we can also equally agree that they aren't making nearly enough to sustain the company on its current path.

If you extrapolate the numbers, you derive about a .00309% profit on the core business. If you peel off the $3 billion in gross tool revenue (as claimed in 2010) at the same margin (highly unlikely as it is), you only see about $9.270 million to the bottom line profitability. Keep in mind also, that selling Craftsman outside of Sears stores also dilutes profit margins...they may sell more on the gross revenue side, but they are also doing so at wholesale margins so that Costco makes money, too. The upside is that these sales likely reach non-Sears customers (or so they hope) and not affect in-store sales.

Based upon these numbers, it appears that they are making only $309 per $100,000 in tool sales. That's not alot to show for nearly $11 Billion in inventory, plant and equipment assets as indicated on the books.

And no, it is highly doubtful they are shipped anything "for free" in their supply contracts. Adjustments are made through general ledger as line items. Warranty costs are usually factored as a cost of sales and the bean counters can usually target a replacement cost for number of items sold. The supplier may be on the risk for a short time, but the additional costs of the lifetime warranty becomes an expense to Sears, which is why they instituted the "re-manufactured replacement" program a few years ago.

 

[powertrip]

sears is not going broke Id be willing to wager they have 100s of billions of dollars in property value, Not to mention sears back charges the vendor for the warranty item, if they take a screwdriver back under warranty whom ever they buy them from is back charged

Exactly. My wife is a lease accountant for a major mall owner. They own just about all of their locations where as most other retailers lease their space.

 

[pipsters]

If you re-read my prior post, I stated that "I have found nothing in any line items that single out the warranty costs; it may be buried somewhere deep in a general ledger report."

No need to re-read. You stated this:

My point was that the lifetime warranty was "at tremendous cost" to the company; not what was the main reason for the decline.

I questioned your statement on the warranty costing Sears a "tremendous" amount and how your link did absolutely nothing to substantiate that claim except provide a link to their earnings reports and then say it doesn't break down any of their costs.

As for "scratching the surface, I'd say a Profit & Loss Statement does in fact go directly to the core of the business; that's why we have them. As I stated earlier, the share price is down more than $100 per share, and profits have backslid for years, to only $133 million across all divisions (Sears Holdings includes all divisions). Since being acquired by hedge fund executive Edward Lampert, Sears and K-Mart have gone nowhere.
Remember Brand Central and The Softer Side of Sears? They're dead.

Nothing to do with the warranty costs and them dragging down Sears bottom line, which is what we were discussing.

I think we are all in agreement that Sears is doing nothing right in terms of management (goes without saying!).

 

[scout127]

I just bought 3 pack cman pro screwdrivers (diff sizes) at the clarksville in sears all on sale bout 40% off. Thye had few pro wrenches indivual but n sets.

 

[byoungblood]

Exactly. My wife is a lease accountant for a major mall owner. They own just about all of their locations where as most other retailers lease their space.

That would explain why they are often the last tenant in many malls that are otherwise totally vacant.

 

[Highlux]

In 2004 I bought the largest tool set Craftsman offered. Like 1200 something pieces. Retailed for 5500. My stuff would be all American made right?

I still have everything...less a couple sockets and a non returned impact driver.
I love all the Pro stuff I have. I dont let my freinds use them...they get the regular stuff. Tons of redundancy in my set. They can use the peon tools I tell them. Gets them wound up...lol.

I do need to get those sockets. Am I sol?

 

[John316]

In 2004 I bought the largest tool set Craftsman offered. Like 1200 something pieces. Retailed for 5500. My stuff would be all American made right?

I still have everything...less a couple sockets and a non returned impact driver.
I love all the Pro stuff I have. I dont let my freinds use them...they get the regular stuff. Tons of redundancy in my set. They can use the peon tools I tell them. Gets them wound up...lol.

I do need to get those sockets. Am I sol?

No. USA CM abounds on the secondary/used market. The only place it's getting hard to find USA Craftsman tools is in Sears. Ebay probably has listings for your missing sockets right now.

 

[Highlux]

No. USA CM abounds on the secondary/used market. The only place it's getting hard to find USA Craftsman tools is in Sears. Ebay probably has listings for your missing sockets right now.

Thanks...I need to do an inventory soon. I havent done one in years.
Its important to me to keep them all. I kinda lose it when I cant find a tool and frantically search for it. I dont know where my 15 amp dewalt circ saw is and its driving me nuts. I cant even use it right now. ( got gimped up at work)

I still have the invoices that list each tool. Takes hours to do. I hunted for a 11/32 6 point 1/2 or something forever cause I had the 12 point and didnt even realize they diidnt make the size. Was a missing slot in the organizer.

Thanks.

 

[Loscaldazar]

Thanks...I need to do an inventory soon. I havent done one in years.
Its important to me to keep them all. I kinda lose it when I cant find a tool and frantically search for it. I dont know where my 15 amp dewalt circ saw is and its driving me nuts. I cant even use it right now. ( got gimped up at work)

I still have the invoices that list each tool. Takes hours to do. I hunted for a 11/32 6 point 1/2 or something forever cause I had the 12 point and didnt even realize they diidnt make the size. Was a missing slot in the organizer.

Thanks.

The vast majority of OPEN stock in sears stores is still USA made too! So you might be able to pick up a few tools (depending on what they are) in store.

 

[woody 73]

The only change will be a different Manufacture/date; the serial numbers will remain the same:

Maybe this post will help if you want the exact match from your early set:

http://www.garagejournal.com/forum/showthread.php?t=84807

looks like a stamp from G1 or G2 for 2004

 

[Highlux]

yup g and g1 va? Everything says forged in USA.

 

[Highlux]

These are the sets that came in my set.

34002 Second Generation Pro set.
34003 Special Application Pro set
34006 Heavy Duty Pro set
34305 Professional Tool set
34007 Pro Automotive Specialty tool set
34001 Next Generation Pro set
34005 Special Access set.