Filed under: Deals, Competitive strategy, Sears Holdings (SHLD)

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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