Sears Holdings Corp. (SHLD) has agreed to sell its popular Craftsman tool brand through Ace Hardware stores, as the company turns again to outsiders to help grow its sales.

Sears and Ace Hardware Corp., the largest retailer-owned cooperative in the hardware industry by sales, said Friday they'll start the partnership with 100 Ace stores selling about 10% of the total Craftsman line in May. The move confirms months of speculation that Sears might turn to an outside hardware or home-improvement chain to help sell the popular line of hand tools, portable power tools and tool storage as sales at Sears namesake department stores have continued to struggle.

Guenther Trieb, president of Sears Brands Management Corp., said in an interview that Sears will decide later whether to roll out the store-within-a-store Craftsman offering to all 4,500 Ace stores. But all stores in June will be allowed to sell a smaller grouping of Craftsman tools for a Father's Day promotion.

"We believe it is a great strategic complement to our current format," Trieb said. "It is a strategic move to drive the overall value of the brand."

Ace currently sells tools made by Stanley Works (SWK) and by Black & Decker Corp. (BDK), two companies that are in the process of merging.

Sears roughly 900 department stores will remain the "headquarters" for sales of Craftsman, which has some 6,000 stock-keeping units, Trieb said. And the Ace stores will also complement Craftsman's presence in about 80 Orchard Supply Hardware stores and 110 Sears Hardware Stores in off-mall locations, he said.

Sears declined to discuss Craftsman's recent business trends but said the line remains the market leader "by far," Trieb said.

With its lifetime guarantee, Craftsman tools have long been popular in the U.S.

Popular Mechanics magazine readers last year named Craftsman as their favorite hand-tool brand, and market-research firm Harris Interactive's 2009 brand-equity ranking listed Craftsman as tops for tools.

Earlier this week, Sears said it will allow franchisees to open Sears Auto Centers. And on Feb. 11, the company's brand-management business announced a trademark licensing deal with a manufacturer to sell DieHard battery chargers, jump starters and other accessories to outside retailers.

Sears has said it won't rule anything out with respect to expanding sales of other well known brands, including Kenmore appliances.

"We are doing these move because we see great strategic opportunity, and we currently don't have any specific plans for Kenmore," Trieb said Friday.

Shares of Sears Holding traded down 0.1% at $94.99 in late trading Friday. Shares of Stanley Works closed down 0.8% at $55.92, while Black & Decker ended regular trading down 1% at $70.62.

Analysts have said Sears, which reports fourth-quarter results Tuesday, must do something to revitalize sales. Sales trends in the department stores weakened through the first two months of the Jan. 30-ended fourth quarter, according to a Sears update Jan. 7. Comparable-store sales were running at a 6% decrease, on top of a 10.7% decline a year ago and compared with a 4.6% drop in the third quarter.

Sears said tools and automotive sales had been stronger, but large-ticket hardline categories offset the increases.

For its part, Ace seems like it could use a boost to its tools business. The cooperative earlier this week said domestic merchandise sales were most hurt by declines in the tools and electrical categories.

The cooperative reported net income of $95.7 million for the Jan. 2-ended fiscal year, an 11.5% increase. Full-year revenue fell 10.4% to $3.5 billion.

-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145; maryellen.lloyd@dowjones.com
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