(Updates with market reaction in fourth paragraph.)
Oct. 13 (Bloomberg) -- Sears Holdings Corp., the largest U.S. department-store chain, is looking to hire a firm to help license three brands, said a person familiar with the situation.
Seeking new sources of revenue, Sears is circulating a proposal for its Craftsman tool, Kenmore appliance and DieHard battery brands, said the person, who declined to be identified because the process isn’t public.
Under a licensing model, Sears would receive a fee to use its name on products. That differs from a current agreement with a handful of retailers including Ace hardware stores and Costco Wholesale Corp., where Sears sells its own products and shares profits with the other merchants.
The shares surged 6 percent in after-hours trading yesterday in New York and rose less than 1 percent to $70.44 today at 10:10 a.m.
Sears in June announced a licensing agreement with Dorcy International to sell DieHard-brand batteries and flashlights.
“It gets your name out there, your product out there, your brand out there, and it’s another revenue stream,” Michael Stone, chief executive officer of The Beanstalk Group in New York, said in a phone interview. The licensing firm’s clients have included Procter & Gamble Co. and Ford Motor Co.
Sears, which is based in Hoffman Estates, Illinois, declined to comment specifically on the proposal.
“As part of our strategy to grow the value of our proprietary brands, we evaluate all avenues including extending the brands into new markets and categories,” Michael Castleman, vice president and head of the Kenmore, Craftsman, and DieHard brands, said yesterday in an e-mailed statement.
While selling brands elsewhere could give people less reason to come to Sears stores, “on the other hand, you could make the case that the Sears experience is going to be amplified elsewhere,” Ira Mayer, publisher of The Licensing Letter, said in a phone interview. “If you can exploit your trademarks in a wider context, you may be building your business long term.”
Sears has posted losses in the previous six quarters, including a steeper decline of $146 million, or $1.37 a share, in the quarter through July 30. The company hasn’t posted a quarterly sales increase since 2007.
--Editors: Robin Ajello, Kevin Orland
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