Costco Buys Sears Delivery Firm for $1B

Costco Wholesale has acquired a third-party logistics business it says will help speed delivery of big and bulky items such as furniture and refrigerators.

The Issaquah, Wash.-based wholesale club operator says it paid $1 billion in cash for Innovel Solutions, the former logistics arm of Sears stores that was owned by Transform Holdco LLC, the parent of Sears and Kmart stores.

Innovel for decades has provided Sears—and more recently, third-party customers including Costco—with “final mile” delivery, installation and what Costco described as “white-glove capabilities” for big and bulky products across the U.S. and Puerto Rico. Products served through Innovel include major appliances, furniture, mattresses, TVs, grills, patio, fitness equipment and wine cellars. It consistently ranks in the top quartile of customer satisfaction scores, Costco said.

Innovel employs more than 1,500 people and operates 11 distribution/fulfillment centers, more than 100 final-mile cross-dock centers and more than 15 million square feet of warehouse space. The company also operates dedicated call centers.

Costco has been a customer of Innovel since 2015.

“We have had a great relationship with Innovel and share a philosophy of taking care of our members. We believe the acquisition will allow us to grow our e-commerce sales of big and bulky items at a faster rate,” Costco CEO Craig Jelinek said in a statement. “Under Costco’s ownership, Innovel will continue to serve Sears and other existing third-party customers.”

Advisers to Costco on the transaction included Moelis & Co. (financial) and Perkins Coie (legal).

Costco currently operates 786 warehouses, including 547 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain and one each in Iceland, France and China. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.