Specialty retailer Restoration Hardware (NASDAQ: RSTO) was supposed to be sold to private equity firm Catterton Partners for $6.70 a share. But, so much for the "done deal," the "sure thing." Late yesterday, Sears Holdings (NASDAQ: SHLD) bought 13.9% of the smaller company's shares.
According to CNN Money, "Sears said it may make a tender offer for all of Restoration Hardware's shares or raise its stake by buying additional shares on the open market." RSTO shares rose to $7.46 after hours.
But with Sears in such deep trouble of its own, why is it fooling around with buying a small retailer with a $250 million market cap, $800 million in sales, and shaky profitability?
Why, indeed? Shareholders in Sears would have a right to be upset. Head man Eddie Lampert would have people believe that his retail giant, which combines Sears and K-Mart, is the picture of efficiency and smart merchandising. Why then, are its shares at a 52-week low of just above $114 a share?
Sears can't waste its time buying little companies. It has too many big problems of its own.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
11-20-2007 @ 9:53AM
Richard said...
It makes no sense to buy stock in a company that is going down the drain in profitability. Sears Holdings needs to concentrate on building customer loyalty and use their resources to improve their current stores. I hear of few people shopping at either Kmart or Sears anymore. Sears would be better served in promoting and expanding the Sears Hardware stores to grow its customer base.
11-20-2007 @ 10:45AM
Pete said...
This is NUT's for Sears to buy, based on a takeover bid. Are things that bad at Sears, that they would try to make chump change from a small company. Well I'v seen the stock in the stores. and I can tell you it's not moning at all. It's time for me to SELL Sears when I see things like this.
1-24-2008 @ 9:56PM
Atlas said...
Restoration hardware, why not is the question I ask myself. Sears’ days are over with cross merchandising its stores, and trying to revitalize the existing stores. The baby boomers purchasing power and influence on retailer’s decisions is over. So is the one stop shop retailer, we are now in the 21’st century where information is a click away. The baby boomers offspring are the new purchasing power and the new influence on retailers marketing, merchandise, and assortment levels. These new pools of purchasers are Brand conscious and aren’t worried about what mom and dad bought in the past. This new hybrid of retailing is the future, Eddie will take brands from Sears and make them into a profitable “durable competitive advantage” for Sears Holdings. You can call it hip if you must, but Kenmore, Craftsman, LandsEnd, and Die Hard are the future of Sears and those brands will do better with more exposure via Restoration Hardware’s retail space, and more itemized Sears stores with 1-2 particular brands. Get rid off all the other crap and investors will get a great ROI!!!