HOFFMAN ESTATES, Ill.,
March 29, 2019 /PRNewswire/
-- Sears Hometown and Outlet Stores, Inc. ("SHO," "our," "we,"
or the "Company") (NASDAQ: SHOS) today reported results for its
fiscal year and quarter ended February 2, 2019.
Overview of Unaudited Results
Results for the fourth fiscal quarter of 2018 compared to the
fourth fiscal quarter of 2017 included:
- Net loss decreased $3.0 million
to $30.3 million from $33.2 million
- Loss per share decreased $0.13 to
$1.33 loss per share from
$1.46 loss per share
- Comparable store sales decreased 8.5%
- Adjusted EBITDA improved $6.9
million to $5.5 million loss
from $12.4 million loss
- Adjusted EBITDA for the fourth quarter of 2018 includes
$6.8 million of negative impacts
directly associated with the Sears Holdings Corporation ("Sears
Holdings") bankruptcy filing on October 15,
2018
Results for the 2018 fiscal year compared to the 2017 fiscal
year included:
- Net loss decreased $41.6 million
to $53.5 million from $95.1 million
- Loss per share decreased $1.83 to
$2.36 loss per share from
$4.19 loss per share
- Comparable store sales decreased 4.6%
- Adjusted EBITDA improved $30.5
million to $16.0 million from
$14.5 million loss
- Adjusted EBITDA for 2018 includes $8.5
million of negative impacts directly associated with the
Sears Holdings bankruptcy filing
Our fiscal years end on the Saturday nearest to the last day of
January. The fourth quarter and fiscal year 2017 included an
extra week (the "53rd week") compared to our 2018 fiscal year. The
53rd week is not included in comparable store sales
calculations.
Will Powell, Chief Executive
Officer and President, said, "The $5.5
million loss in adjusted EBITDA that we posted for the
fourth quarter represented a significant improvement in adjusted
EBITDA over the fourth quarter of 2017. The quarter was also
our fourth consecutive quarter, and our sixth in the last seven
quarters, with improved adjusted EBITDA compared to the same period
in the prior year. We were able to post these improved
adjusted EBITDA results despite the distractions and headwinds
associated with the Sears Holdings bankruptcy proceedings, which
had a direct negative impact on our results. Specific
negative impacts detailed below totaling $6.8 million were included in our adjusted EBITDA
for the quarter.
"Year-to-date, our adjusted EBITDA improved by $30.5 million from last year. These
significantly improved adjusted EBITDA results were achieved
despite specific negative impacts detailed below of $8.5 million related to the Sears Holdings
bankruptcy proceedings, which negative impacts were included in our
adjusted EBITDA for the year. In addition, 2017 results
included an adjusted EBITDA benefit from the 53rd week
of $2.3 million."
Thousands
|
|
13 Weeks Ended
February 2, 2019
|
|
52 Weeks Ended
February 2, 2019
|
Adjusted
EBITDA
|
|
$
|
(5,456)
|
|
$
|
16,023
|
Impact from
non-recurring Sears Holdings bankruptcy issues:
|
|
|
|
|
Protection agreement
margin impact
|
|
3,295
|
|
$
|
3,795
|
Unpaid prepetition
subsidy and cash discounts due from Sears Holdings
|
|
—
|
|
1,151
|
Advisory
fees
|
|
1,620
|
|
1,620
|
Event cancellation
fees and related expenses
|
|
1,910
|
|
1,910
|
Adjusted EBITDA
excluding non-recurring Sears Holdings bankruptcy issues
|
|
$
|
1,369
|
|
$
|
24,499
|
|
|
|
|
|
Thousands
|
|
14 Weeks Ended
February 3, 2018
|
|
53 Weeks Ended
February 3, 2018
|
Adjusted
EBITDA
|
|
$
|
(12,368)
|
|
$
|
(14,525)
|
Impact of
53rd week in fiscal 2017
|
|
(2,300)
|
|
(2,300)
|
Adjusted EBITDA
excluding 53rd week
|
|
$
|
(14,668)
|
|
$
|
(16,825)
|
When the non-recurring factors in the table above are excluded,
adjusted EBITDA would have been a positive $1.4 million for the fourth quarter and
$24.5 million for the full year,
representing increases for comparable items of $16.0 million and $41.3
million for the fourth quarter and full year,
respectively.
We increased our borrowings late in the third quarter before
Sears Holdings's anticipated bankruptcy filing to enhance our
financial flexibility to deal with possible disruptions to our
business that might be caused by the Sears Holdings bankruptcy. We
ended the quarter with $15.1 million
in cash and cash equivalents, including $6.5
million in additional borrowings that we could have repaid
to reduce borrowings under our Senior ABL Facility. For the
year, we reduced our debt, net of cash, by $10.6 million.
We continue to implement our strategic plan to transform our
business. Measurable progress is evident across many of our
initiatives that serve to enable this change. Examples
include:
- Changes to our as-is appliance sourcing as well as lower
promotional markdowns from price optimization led to margin
improvement in the quarter of 800 basis points in our Outlet
segment. Additionally, the Outlet segment has had positive
comparable store sales of 2.5% since July when we anniversaried the
impact of the change in our pricing strategy.
- In the fourth quarter 2018 lease-to-own comparable sales
increased 34.1% and leasing's share of total sales increased to
10.0%, up 318 basis points compared to the fourth quarter 2017. For
the full year, lease-to-own comparable sales increased 38.6%.
- SearsHometown.com and SearsOutlet.com sales were up 25.5% and
9.5%, respectively, compared to fourth quarter 2017.
SearsHometown.com balance of sales grew 140 basis points compared
to the fourth quarter 2017. SearsOutlet.com balance of sales grew
183 basis points compared to the fourth quarter 2017.
- In the fourth quarter we made some progress on our initiative
to reduce the growing losses in our Hometown segment by closing, or
starting the closure, of 105 stores in the segment. We had
inventory investments in these stores of $28.8 million at the beginning of their
inventory-liquidation process. As of the end of our fiscal year,
inventory liquidation was complete in 81 of these stores while 24
stores had initiated inventory liquidations that were completed in
February 2019. These store closings
resulted in a one-time charge of $7.5
million in the fourth quarter, but advanced our efforts to
reduce the growing losses in our Hometown segment and strengthen
our balance sheet. A group of stores in our Hometown segment
continue to provide an insufficient return for the capital we have
invested in these stores (and for many stores the return was
negative), and these stores, as a group, continue to generate
growing negative adjusted EBITDA. During the quarter we continued
our efforts to improve the performance of these unproductive stores
through our business-improvement initiatives. Our efforts
notwithstanding, these stores have not achieved, and we believe
that these stores, despite our efforts to reduce segment expenses,
will not in the foreseeable future achieve, an acceptable level of
investment return and profitability. During the quarter we
experienced significant supply-chain cost increases and Craftsman
and Kenmore merchandise
availability issues that had a disproportionately adverse impact on
the Hometown segment. These increases and issues are continuing,
and we believe they will worsen during the next several quarters.
As a consequence, during the quarter we sought to work with the
dealers operating these unproductive stores to exit the business
should they determine that is also in their best interests. We
expect we will close a group of Hometown stores in the first
quarter of 2019 that will result in a one-time charge, but we
cannot yet ascertain the size of that group or the potential
associated charges. We do not believe that these first-quarter
store closures, by themselves, will enable the Hometown segment to
generate positive adjusted EBITDA in the foreseeable future.
Fourth Quarter Performance Highlights
Consolidated comparable store sales decreased 8.5% in the fourth
quarter of 2018. Comparable store sales were adversely impacted by
negative effects of the Sears Holdings bankruptcy proceedings,
including adverse publicity and inventory availability issues, and
a deliberate change in our holiday promotional strategy to reduce
promotional discounting in the quarter. Hometown segment
comparable store sales decreased 13.0% in the fourth quarter of
2018. Our promotional strategy for the fourth quarter was
significantly less aggressive than last year, which drove a
significant portion of the negative comparable sales in the
Hometown segment. The negative effects of the Sears Holdings
bankruptcy proceedings had a disproportionately adverse impact on
our Hometown segment during the quarter. Outlet segment
comparable store sales increased 0.2% in the fourth quarter of
2018.
Consolidated gross margin was $58.9
million, or 19.7% of net sales, in the fourth quarter of
2018 compared to $75.8 million, or
19.1% of net sales, in the fourth quarter of 2017. The gross
margin rate improvement of 60 basis points was primarily due to
higher margin on merchandise sales in both segments partially
offset by disruptions in protection agreement sales related to the
Sears Holdings bankruptcy, accelerated closing store costs
($7.5 million in the fourth quarter
of 2018 compared to $1.9 million in
the fourth quarter of 2017), and higher occupancy costs as a
percentage of sales.
- Hometown gross margin decreased $23.1
million, or 43.0%, to $30.7
million in the fourth quarter of 2018. Hometown gross margin
rate declined by 352 basis points to 16.2%. The decline in gross
margin dollars was driven by sales volume decreases and a lower
gross margin rate. The 352 basis point decrease in gross margin
rate was primarily driven by higher accelerated store closing costs
($7.5 million in the fourth quarter
of 2018 compared to $1.1 million in
the fourth quarter of 2017), lower protection agreement sales due
to disruptions from the Sears Holdings bankruptcy, and higher
supply chain costs. Excluding the impact of the lower protection
agreement sales and the higher closing store costs from both
periods, the gross margin rate improved by 76 basis points in the
fourth quarter of 2018 compared to the fourth quarter of 2017.
- Outlet gross margin increased $6.3
million, or 28.8%, to $28.3
million in the fourth quarter of 2018. Outlet gross margin
rate improved by 800 basis points to 25.8% driven by higher margins
on merchandise sales and lower closing store costs ($0.0 million in the fourth quarter of 2018
compared to $0.7 million in the
fourth quarter of 2017), partially offset by lower protection
agreement sales due to disruptions from the Sears Holdings
bankruptcy. Excluding the impact of protection agreements and
closing store costs from both periods, the gross margin rate
improved 917 basis points in the fourth quarter of 2018 compared to
the fourth quarter of 2017.
Consolidated selling and administrative expenses decreased to
$79.2 million, or 26.5% of net sales,
in the fourth quarter of 2018 from $100.4 million, or 25.4% of net sales, in the
prior-year comparable quarter. The dollar decrease was
primarily due to lower commissions paid to dealers and franchisees
on lower sales volume, expenses associated with the 53rd week in
2017, lower provisions related to franchisee notes
receivables ($0.3 million credit in
the fourth quarter of 2018 compared to a $1.5 million charge in the fourth quarter of
2017). IT transformation investments were $7.6 million, or 2.5% of sales, in the fourth
quarter of 2018 compared to $8.9
million, or 2.2% of sales, in the fourth quarter of
2017.
We recorded operating losses of $26.0
million and $31.1 million in
the fourth quarters of 2018 and 2017, respectively. The
decrease in operating loss was due to lower selling and
administrative expenses and a higher gross margin rate, partially
offset by lower volume from closed stores and a decline in Hometown
comparable store sales.
We recorded a net loss of $30.3
million for the fourth quarter of 2018 compared to a net
loss of $33.2 million for the
prior-year comparable quarter. The decrease in our net loss
was primarily attributable to the factors discussed above,
partially offset by higher interest expense.
Consolidated adjusted EBITDA improved $6.9 million to a $5.5
million loss in the fourth quarter of 2018 from a
$12.4 million loss in the fourth
quarter of 2017.
- Hometown adjusted EBITDA decreased $1.5
million to a $9.7 million loss
in the fourth quarter of 2018 from a $8.1
million loss in the fourth quarter of 2017. The decrease was
driven by higher closing store costs, lower protection agreement
sales, and lower gross margin rate on lower volume, partially
offset by lower selling and administrative expenses.
- Outlet adjusted EBITDA increased $8.5
million in the fourth quarter of 2018 to $4.2 million from a loss of $4.3 million in the fourth quarter of 2017. The
improvement was driven by an improved gross margin rate and lower
selling and administrative expenses.
Full Year Results
Net sales for 2018 decreased $270.0
million, or 15.7%, to $1.4
billion from $1.7 billion in
2017. This decrease was driven primarily by the impact of
closed stores (net of new store openings), a 4.6% decrease in
comparable store sales (including a 8.5% decline in the fourth
quarter) and sales of $23.4 million
in the 53rd week of 2017. Comparable store sales were down 6.0% and
1.8% in Hometown and Outlet, respectively. Home appliances
outperformed the average comparable store sales while tools and
lawn and garden underperformed to the average.
Gross margin was $323.2 million,
or 22.3% of net sales, for 2018 compared to $348.5 million, or 20.3% of net sales, for
2017. The increase in gross margin rate was primarily driven
by higher margin on merchandise sales partially offset by higher
occupancy costs as a percentage of sales resulting from a greater
mix of Company-operated stores compared to the prior year.
Accelerated store closing costs were $13.4
million for 2018 compared to $14.8
million for 2017. The total impact of occupancy costs
and accelerated closing store costs reduced gross margin rate 511
basis points for 2018 compared to a 468 basis-point reduction for
2017.
Selling and administrative expenses decreased to $349.1 million, or 24.1% of net sales, for 2018
from $419.6 million, or 24.4% of net
sales, for 2017. The decrease was primarily due to: (1) lower
commissions paid to dealers and franchisees on lower sales volume
and lower store count, (2) lower expenses being recorded for stores
closed (net of new store openings), (3) lower IT transformation
costs ($25.9 million for 2018
compared to $34.4 million for 2017),
(4) $4.8 million lower provision
related to franchisee notes receivables, and (5) expenses
associated with the 53rd week in 2017. These decreases were
partially offset by higher payroll and benefits associated with
annual incentive plan payouts. On a rate-to-sales basis, IT
transformation costs and provisions for franchisee note receivables
increased selling and administrative expenses 197 basis points for
2018 compared to 243 basis points for 2017.
During the third quarter of 2018, we completed the sale of an
owned property located in Newington, Connecticut. Net
proceeds from the sale were $2.8
million, and we recorded a gain on the sale of $1.4 million. We did not sell any owned
property in fiscal 2017.
We recorded operating losses of $39.0
million and $87.4 million for
2018 and 2017, respectively. The decrease in operating loss
was primarily due to lower selling and administrative expense, a
higher gross margin rate partially offset by lower volume and a
$2.3 million favorable impact from
the 53rd week in 2017.
We recorded a net loss of $53.5
million for 2018 compared to a net loss of $95.1 million for 2017. The decrease in our
net loss was primarily attributable to a lower operating loss
partially offset by higher interest expense.
Financial Position
We had cash and cash equivalents of $15.1
million as of February 2, 2019
and $10.4 million as of February 3, 2018. Unused borrowing capacity
as of February 2, 2019 under the
Senior ABL Facility was $27.7 million
with $93.0 million drawn and
$7.2 million of letters of credit
outstanding. On February 16,
2018, the Company entered into a $40
million Term Loan Credit Agreement with Gordon Brothers
Finance Company (the "Term Loan Agreement"). The Term Loan
Agreement is secured by a second lien security interest
(subordinate only to the liens securing the Senior ABL Facility) on
substantially all the assets of the Company and its subsidiaries
(the same assets as the assets specified with respect to the Senior
ABL Facility). The proceeds of the $40
million loan under the Term Loan Agreement were used
primarily to reduce borrowings under the Senior ABL Facility.
For the full year 2018, we funded ongoing operations with cash
provided by operating activities. Our primary needs for
liquidity are to fund inventory purchases, our IT transformation,
capital expenditures and for general corporate purposes.
In the fourth quarter of 2018, we did not make payments on
accelerated terms for Sears Holdings's invoices in exchange for
cash discounts. Such discounts, when received throughout the
year, resulted in a net financial benefit to the Company when
netted against incremental interest expense. Since during the
fourth quarter we paid Sears Holdings on our normal ten-day,
no-discount terms, the Senior ABL Facility borrowings did not
increase as of February 2, 2019 as a
result of accelerated payments.
Total merchandise inventories were $277.3
million at February 2, 2019 and $336.3 million at February 3, 2018.
Merchandise inventories declined $56.6
million and $2.4 million in
Hometown and Outlet, respectively. The decrease in Hometown
was primarily due to store closures, in addition to efforts to
reduce non-productive inventory. Outlet's decrease was
primarily driven by new sourcing contracts that allow for improved
flow of inventory of as-is appliances to match forecasted
sales.
IT Transformation and Operational Developments
We continued to make progress toward the implementation of our
new information technology and operating systems. At the end
of the quarter, system architecture, coding and testing were
substantially complete, and the majority of the functionality had
been put into production. As expected, we successfully
expanded our pilot of the POS and ERP systems into an additional
Outlet distribution facility and the associated network of stores
that are serviced by this facility. We are working to finalize the
Outlet segment deployment which we anticipate will continue
throughout the remainder of the first fiscal quarter of 2019.
During the quarter, we continued to expand our direct sourcing
capabilities and completed several additional merchandise supply
agreements with suppliers. We also entered into several
non-merchandise agreements with various service providers that
previously supported our business through Sears Holdings.
Selling and administrative expenses included $7.6 million of IT transformation investments in
the fourth quarter of 2018 compared to $8.9
million in the fourth quarter of 2017. We do not
expect significant IT build fees or systems development costs after
the second quarter of our 2019 fiscal year.
Comparable Store Sales
Comparable store sales include applicable merchandise sales for
all stores operating for a period of at least 12 full months,
including remodeled and expanded stores but excluding store
relocations and stores that have undergone format changes.
Comparable store sales include online transactions fulfilled and
recorded by SHO and give effect to the change in the unshipped
sales reserves recorded at the end of each reporting period.
Adjusted EBITDA
In addition to our net loss determined in accordance with
generally accepted accounting principles ("GAAP"), for purposes of
evaluating operating performance we also use adjusted earnings
before interest, taxes, depreciation and amortization, or "adjusted
EBITDA," which excludes certain significant items as set forth and
discussed below. Our management uses adjusted EBITDA, among other
factors, for evaluating the operating performance of our business
for comparable periods. Adjusted EBITDA should not be used by
investors or other third parties as the sole basis for formulating
investment decisions as it excludes a number of important cash and
non-cash recurring items. Adjusted EBITDA should not be considered
as a substitute for GAAP measurements.
While adjusted EBITDA is a non-GAAP measurement, we believe it
is an important indicator of operating performance for investors
because:
- EBITDA excludes the effects of financing and investing
activities by eliminating the effects of interest and depreciation
costs; and
- Other significant items, while periodically affecting our
results, may vary significantly from period to period and may have
a disproportionate effect in a given period, which affects
comparability of results. These items may also include cash charges
such as severance and executive transition costs and IT
transformation investments that make it difficult for investors to
assess the Company's core operating performance.
The Company has undertaken an initiative on a limited number of
occasions to accelerate the closing of under-performing locations
in an effort to improve profitability and make the most productive
use of capital. Under-performing locations are typically closed
during the normal course of business at the termination of a lease
or the expiration of a franchise or dealer agreement and, as a
result, do not have significant future lease, severance, or other
non-recurring store-closing costs. When we conduct a significant
number of store closings or we close stores prior to lease
termination or expiration (together, "accelerated store closings"),
the Company excludes the associated costs of the accelerated store
closings from adjusted EBITDA.
The following table presents a reconciliation of adjusted EBITDA
and adjusted EBITDA excluding non-recurring items to net loss, the
most comparable GAAP measure, for each of the periods
indicated:
Preliminary
and subject to change
|
|
13 and 14 Weeks
Ended
|
|
52 and 53 Weeks
Ended
|
Thousands
|
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
Net loss
|
|
$
|
(30,269)
|
|
|
$
|
(33,244)
|
|
|
$
|
(53,464)
|
|
|
$
|
(95,057)
|
|
Income tax expense
(benefit)
|
|
304
|
|
|
(130)
|
|
|
164
|
|
|
504
|
|
Other
income
|
|
(18)
|
|
|
(181)
|
|
|
(367)
|
|
|
(925)
|
|
Interest
expense
|
|
4,019
|
|
|
2,444
|
|
|
14,676
|
|
|
8,058
|
|
Operating
loss
|
|
(25,964)
|
|
|
(31,111)
|
|
|
(38,991)
|
|
|
(87,420)
|
|
Depreciation and
amortization
|
|
3,588
|
|
|
3,129
|
|
|
12,374
|
|
|
13,039
|
|
Impairment of
property and equipment
|
|
2,089
|
|
|
3,357
|
|
|
2,089
|
|
|
3,357
|
|
Gain on the sale of
assets
|
|
—
|
|
|
—
|
|
|
(1,358)
|
|
|
—
|
|
Provision for
franchisee note losses, net of recoveries
|
|
(315)
|
|
|
1,541
|
|
|
2,594
|
|
|
7,361
|
|
IT transformation
investments
|
|
7,606
|
|
|
8,857
|
|
|
25,923
|
|
|
34,374
|
|
Costs associated with
accelerated store closings
|
|
7,540
|
|
|
1,859
|
|
|
13,392
|
|
|
14,764
|
|
Adjusted
EBITDA
|
|
$
|
(5,456)
|
|
|
$
|
(12,368)
|
|
|
$
|
16,023
|
|
|
$
|
(14,525)
|
|
Impact from
non-recurring Sears Holdings bankruptcy issues
|
|
6,825
|
|
|
—
|
|
|
8,476
|
|
|
—
|
|
Impact of 53rd week
in fiscal 2017
|
|
—
|
|
|
(2,300)
|
|
|
—
|
|
|
(2,300)
|
|
Adjusted EBITDA
excluding non-recurring items
|
|
$
|
1,369
|
|
|
$
|
(14,668)
|
|
|
$
|
24,499
|
|
|
$
|
(16,825)
|
|
The following table presents a reconciliation of our Hometown
segment's adjusted EBITDA to operating loss, the most comparable
GAAP measure for our Hometown segment, for each of the periods
indicated:
Preliminary
and subject to change
|
|
13 and 14 Weeks
Ended
|
|
52 and 53 Weeks
Ended
|
Thousands
|
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
Operating
loss
|
|
$
|
(25,264)
|
|
|
$
|
(19,061)
|
|
|
$
|
(58,333)
|
|
|
$
|
(45,109)
|
|
Depreciation and
amortization
|
|
1,884
|
|
|
1,458
|
|
|
6,263
|
|
|
5,378
|
|
Impairment of
property and equipment
|
|
1,007
|
|
|
2,581
|
|
|
1,007
|
|
|
2,581
|
|
Provision for
franchisee note losses, net of recoveries
|
|
(94)
|
|
|
(92)
|
|
|
(245)
|
|
|
(200)
|
|
IT transformation
investments
|
|
5,267
|
|
|
5,881
|
|
|
17,950
|
|
|
22,847
|
|
Accelerated closure
of under-performing stores
|
|
7,540
|
|
|
1,116
|
|
|
13,651
|
|
|
6,952
|
|
Adjusted
EBITDA
|
|
$
|
(9,660)
|
|
|
$
|
(8,117)
|
|
|
$
|
(19,707)
|
|
|
$
|
(7,551)
|
|
The following table presents a reconciliation of our Outlet
segment's adjusted EBITDA to operating income (loss), the most
comparable GAAP measure for our Outlet segment, for each of the
periods indicated:
Preliminary
and subject to change
|
|
13 and 14 Weeks
Ended
|
|
52 and 53 Weeks
Ended
|
Thousands
|
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
Operating (loss)
income
|
|
$
|
(700)
|
|
|
$
|
(12,050)
|
|
|
$
|
19,342
|
|
|
$
|
(42,311)
|
|
Depreciation and
amortization
|
|
1,704
|
|
|
1,671
|
|
|
6,111
|
|
|
7,661
|
|
Impairment of
property and equipment
|
|
1,082
|
|
|
776
|
|
|
1,082
|
|
|
776
|
|
Gain on sale of
assets
|
|
—
|
|
|
—
|
|
|
(1,358)
|
|
|
—
|
|
Provision for
franchisee note losses, net of recoveries
|
|
(221)
|
|
|
1,633
|
|
|
2,839
|
|
|
7,561
|
|
IT transformation
investments
|
|
2,339
|
|
|
2,976
|
|
|
7,973
|
|
|
11,527
|
|
Accelerated closure
of under-performing stores
|
|
—
|
|
|
743
|
|
|
(259)
|
|
|
7,812
|
|
Adjusted
EBITDA
|
|
$
|
4,204
|
|
|
$
|
(4,251)
|
|
|
$
|
35,730
|
|
|
$
|
(6,974)
|
|
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING AND OTHER
INFORMATION
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
(the "forward-looking statements"). Statements preceded or followed
by, or that otherwise include, the words "believes," "expects,"
"anticipates," "intends," "project," "estimates," "plans,"
"forecast," "is likely to," "and similar expressions or future or
conditional verbs such as "will," "may," "would," "should," and
"could" are generally forward-looking in nature and not historical
facts. The forward-looking statements are subject to significant
risks and uncertainties that may cause our actual results,
performance, and achievements in the future to be materially
different from the future results, future performance, and future
achievements expressed or implied by the forward-looking
statements. The forward-looking statements include, without
limitation, information concerning our future financial
performance, business strategies, plans, goals, beliefs,
expectations, and objectives. The forward-looking statements are
based upon the current beliefs and expectations of our
management.
Subsequent to the Company's 2012 separation from Sears Holdings
(the "Separation") we have had significant business relationships
with Sears Holdings and its subsidiaries, and we have relied
heavily on them for merchandise and services through various
agreements among the Company, Sears Holdings and, in some
circumstances, subsidiaries of Sears Holdings (together the
"Operative Agreements"). During October 2018 Sears Holdings and many of its
subsidiaries (together the "Sears Holdings Companies") filed
voluntary petitions in the United
States Bankruptcy Court for the Southern District of
New York seeking relief under
Chapter 11 of Title 11 of the United States Code. The
Company, which is not a subsidiary of Sears Holdings, is not
included in the bankruptcy petitions filed by the Sears Holdings
Companies, and neither the Company nor its subsidiaries have filed
a bankruptcy petition. As part of the Sears Holdings
Companies' bankruptcy proceedings Transform Holdco LLC ("Transform
Holdco") acquired most of the operating assets (including Sears
stores) and related assets of the Sears Holdings Companies
(together the "Sears Assets"), and the Operative Agreements were
assigned by the Sears Holdings Companies to, and the obligations
thereunder were assumed by, Transform Holdco on or about
February 11, 2019. According to
publicly available information, (1) ESL Investments, Inc. and
investment affiliates including Edward S.
Lampert (together "ESL") control Transform Holdco and (2)
ESL owns approximately 58.8% of the Company's outstanding shares of
common stock.
The following factors, among others, could (A) cause our actual
results, performance, and achievements to differ materially from
those expressed in the forward-looking statements, and one or more
of the differences could have a material adverse effect on our
ability to operate our business and (B) have a material adverse
effect on our results of operations, financial condition,
liquidity, cash flows, and overall ability to operate our
businesses (especially the Hometown segment businesses, given their
dependence on purchasing merchandise branded with the KENMORE®,
CRAFTSMAN®, and DIEHARD® marks (which marks are owned by, or
licensed to, subsidiaries of Transform Holdco, together the "KCD
Marks"), and obtaining supply-chain services, in accordance with
the Operative Agreements):
- The willingness and ability of Transform Holdco to perform all
of its obligations in accordance with the terms and conditions of
the Operative Agreements;
- We believe that Transform Holdco was recently formed, had no
retail business operations prior to its acquisition of the Sears
Assets and the assumption of the Operative Agreements, and will
rely, at least initially, on Sears Holdings and its subsidiaries
and other third parties to provide to Transform Holdco the
merchandising and other services that Transform Holdco is obligated
to provide to the Company in accordance with the Operative
Agreements;
- The ability of Transform Holdco to resolve, on operational and
financial terms that are satisfactory to Transform Holdco, its
reported current disputes and future disputes, if any, with the
Sears Holdings Companies regarding Transform Holdco's acquisition
of the Sears Assets and the assumption of related obligations;
- Transform Holdco is not a public company, and it does not, and
we believe likely will not, disclose publicly any information
regarding its results of operations, financial condition,
liquidity, cash flows, or overall ability to operate its businesses
and provide merchandising and other services to the Company in
accordance with the Operative Agreements (and Transform Holdco has
not given the Company any of such information);
- Our ability to (1) significantly reduce or eliminate the
Hometown segment's growing operating losses (due in part to
increasing supply-chain costs and declining Craftsman and
Kenmore merchandise availability,
which are having a disproportionately adverse effect on the
Hometown segment businesses) and (2) close, or seek the closure of,
unproductive Hometown segment stores and to significantly reduce
the inventory, marketing, promotion, supply chain, and other
expenses associated with these stores;
- Our ability to generate the necessary liquidity to service our
indebtedness and meet our other cash needs;
- With respect to the Sears Holdings Companies' bankruptcy
proceedings and Transform Holdco's assumption of the Operative
Agreements, (1) the Senior ABL Facility provides for significant
lender discretion, such as the ability to reduce loan advance-rates
(through the imposition of reserves against the Company's borrowing
base), which could reduce the amounts that the Company could borrow
or require the Company to repay amounts already borrowed and (2)
the lenders could assert that they have no obligation to extend to
the Company additional loans on the basis that the Company has
suffered a "Material Adverse Effect" and (3) the Company's
inability to enforce any of the Separation Agreements could be an
"Event of Default" under the Senior ABL Facility that would permit
the lenders to accelerate and immediately call due all of the
Company's outstanding loans;
- With respect to the Sears Holdings Companies' bankruptcy
proceedings and Transform Holdco's assumption of the Operative
Agreements, (1) the Term Loan Agreement provides for significant
lender discretion, such as the ability to increase reserves with
respect to the Term Loan Agreement's borrowing base, which could
require the establishment and maintenance of a reserve under, and
thereby reduce the amounts that the Company could borrow under, the
Senior ABL Facility, and could also require the Company to make a
prepayment under the Term Loan Agreement, and (2) the Company's
inability to enforce any of the Separation Agreements could be an
"Event of Default" under the Term Loan Agreement that would permit
the lender to accelerate and immediately call due the Company's
outstanding loan under the Term Loan Agreement;
- The Sears Holdings Unsecured Creditors Committee is
investigating transfers to ESL and other current and former
insiders of Sears Holdings in connection with "Insider
Transactions," including the Separation;
- The possible perceptions of our vendors, suppliers, lenders
under the Senior ABL Facility and the Term Loan Agreement, and
customers that, as a result of the Sears Holdings bankruptcy
proceedings and Transform Holdco's assumption of the Operative
Agreements, the Company's ability to operate its businesses
(especially the Company's Hometown segment businesses) has been
materially and adversely affected;
- Transform Holdco, which has assumed the Operative Agreements,
could decline to renew, or upon renewal materially modify to our
material disadvantage, our rights under the Amended and Restated
Merchandising Agreement, one of the Operative Agreements, pursuant
to which we have rights to acquire merchandise branded with the KCD
Marks from Transform Holdco (we do not have rights to purchase
directly from manufacturers merchandise branded with the KCD Marks
and, despite our efforts, we have been unable to obtain those
rights);
- The Amended and Restated Merchandising Agreement provides that
(1) if a third party that is not an affiliate of Transform Holdco
(as assignee) acquires the rights to one or more (but less than
all) of the KCD Marks Transform Holdco may terminate our rights to
buy merchandise branded with any of the acquired KCD Marks and (2)
if a third party that is not an affiliate of Transform Holdco
acquires the rights to all of the KCD Marks Transform Holdco may
terminate the Amended and Restated Merchandising Agreement in its
entirety, over which events we have no control;
- The sale by Transform Holdings and its subsidiaries to other
retailers that compete with us of major home appliances and other
products branded with one of the KCD Marks;
- Our ability to offer merchandise and services that our
customers want, including those branded with the KCD Marks;
- Transform Holdco may explore alternatives for its Kenmore, Craftsman, and Diehard businesses and
further expand the presence of these brands including by evaluating
potential partnerships or other transactions;
- The sale of Kenmore and
Diehard products on Amazon.com;
- Our ability to successfully manage our inventory levels and
implement initiatives to improve inventory management and other
capabilities;
- Competitive conditions in the retail industry;
- Worldwide economic conditions and business uncertainty, the
availability of consumer and commercial credit, changes in consumer
confidence, tastes, preferences and spending, and changes in vendor
relationships;
- The fact that our past performance generally, as reflected on
our historical financial statements, may not be indicative of our
future performance as a result of, among other things, our reliance
on Transform Holdco for most products and services that are
important to the successful operation of our business, and our
potential need to rely on Transform Holdco for some products and
services beyond the expiration of our agreements with Transform
Holdco;
- We believe that Transform Holdco is seeking to negotiate supply
agreements with its appliance, lawn and garden, tools, and other
vendors, which vendors may not be willing to supply merchandise to
Transform Holdco on terms (including vendor-payment terms for
Transform Holdco's merchandise purchases) that are acceptable to it
(which payment terms, we believe, could become uneconomic for
Transform Holdco and for us);
- The willingness of Transform Holdco's appliance, lawn and
garden, tools, and other vendors to continue to pay to Transform
Holdco's merchandise-related subsidies and allowances and cash
discounts (Transform Holdco is obligated to pay to a portion of
these subsidies and allowances to us, and the amounts required to
be paid to us declined significantly during 2018);
- Our ability to resolve, on commercially reasonable terms,
future disputes with Transform Holdco, if any, regarding the
material terms and conditions of our agreements with Transform
Holdco;
- Our ability to establish information, merchandising, logistics,
and other systems separate from Transform Holdco that would be
necessary to ensure continuity of merchandise supplies and services
for our businesses if, in connection with Transform Holdco's
acquisition of the Sears Assets, vendors were to reduce, or cease,
their merchandise sales to Transform Holdco or provide logistics
and other services to Transform Holdco or if Transform Holdco were
to reduce, or cease, its merchandise sales to us or reduce
providing, or cease to provide, logistics and other services to
us;
- If Transform Holdco's sales of major appliances and lawn and
garden merchandise to its retail customers decline Transform
Holdco's sales to us of outlet-value merchandise could
decline;
- Our ability to maintain an effective and productive business
relationship with Transform Holdco, especially if future disputes
were to arise with respect to the terms and conditions of the
Operative Agreements;
- Most of our agreements related to the Separation and our
continuing relationship with Transform Holdco were negotiated while
we were a subsidiary of Sears Holdings (except for amendments
agreed to after the Separation), and we may have received different
terms from unaffiliated third parties (including with respect to
merchandise-vendor and service-provider indemnification and defense
for negligence claims and claims arising out of failure to comply
with contractual obligations);
- Our reliance on Transform Holdco to provide computer systems
acquired as part of the Sears Assets to process transactions with
our customers (including the point-of-sale system for the stores we
operate and the stores that our independent dealers and independent
franchisees operate, which point-of-sale system captures, among
other things, credit-card information supplied by our customers)
and others, quantify our results of operations, and manage our
business ("SHO's TH-Supplied Systems");
- SHO's TH-Supplied Systems could be subject to disruptions and
data/security breaches (Sears Holdings announced during 2017 that
its Kmart store payment-data systems had been infected with a
malicious code and that the code had been removed and the event
contained and during April 2018 Sears
Holdings announced that one of its vendors that provides online
support services to Sears and Kmart had notified Sears Holdings
that the vendor had experienced a security incident during 2017
that involved unauthorized access to credit card information with
respect to less than 100,000 Sears Holdings's customers), and
Transform Holdco could be unwilling or unable to indemnify and
defend us against third-party claims and other losses resulting
from such disruptions and data/security breaches, which could have
one or more material adverse effects on SHO;
- Our ability to implement our IT transformation for our Outlet
segment stores by the end of the first quarter of our 2019 fiscal
year in accordance with our plans, expectations, current timetable,
and anticipated cost;
- Limitations and restrictions in the Senior ABL Facility and the
Term Loan Agreement and their related agreements governing our
indebtedness;
- The Senior ABL Facility will mature on the earliest of (1)
February 29, 2020, (2) six months
prior to the expiration of specified Operative Agreements unless
they are extended to a date later than February 29, 2020 or are terminated on a basis
reasonably satisfactory to the Senior ABL Facility lenders, and (3)
acceleration of the maturity date following an event of
default;
- The Term Loan Agreement will mature on the earliest of (1) the
maturity date specified in the Senior ABL Facility, (2)
February 16, 2023, and (3)
acceleration of the maturity date following an event of
default;
- The Senior ABL Facility and the Term Loan Agreement each
matures less than one year after the date we will issue our
financial statements for fiscal 2018. The Company is in discussions
with the administrative agent for the Senior ABL Facility about its
extension or refinancing. While we believe that we will be able to
extend or refinance the Senior ABL Facility prior to its maturity,
an extension or refinancing has not occurred and cannot be
considered "probable" as defined under applicable accounting
standards. As a result, as we reported in our most recent Quarterly
Report on Form 10-Q, "substantial doubt" as defined under
applicable accounting standards is deemed to exist about our
ability to continue as a going concern. Absent an extension or
refinancing of the Senior ABL Facility, we expect that this
substantial doubt will continue to exist and result in a
going-concern explanatory paragraph in the audit opinion on our
financial statements for fiscal 2018, which would require us to
obtain a waiver from the lenders under the Senior ABL Facility and
the Term Loan Agreement;
- Our ability to extend or refinance the Senior ABL Facility and
refinance the Term Loan Agreement and obtain additional financing
on acceptable terms;
- Competitors could continue to reduce their promotional pricing
on new-in-box appliances, which could continue to adversely impact
our sales of out-of-box appliances and associated margin;
- Our ability to generate profitable sales of merchandise and
services on our transactional ecommerce websites in the amounts we
have planned to generate;
- Our dependence on the ability and willingness of our
independent dealers and independent franchisees to operate their
stores profitably and in a manner consistent with our concepts and
standards;
- Our dependence on sources outside the U.S. for significant
amounts of our merchandise inventories;
- Fixed-asset impairment for long-lived assets;
- Our ability to attract, motivate, and retain key executives and
other employees;
- Our ability to maintain effective internal controls as a
publicly held company;
- Low trading volume of our common stock due to limited liquidity
or a lack of analyst coverage; and
- The impact on our common stock and our overall performance as a
result of our principal stockholder's ability to exert control over
us.
The foregoing factors should not be understood as exhaustive and
should be read in conjunction with the other cautionary statements,
including "Risk Factors," that are included in the Annual Report on
Form 10-K for our fiscal year ended February
3, 2018 and in our other filings with the Securities and
Exchange Commission and our other public announcements. While we
believe that our forecasts and assumptions are reasonable, we
caution that actual results may differ materially. If one or more
of these or other risks or uncertainties materialize, or if our
underlying assumptions prove to be incorrect, actual results may
vary materially from what we projected. Consequently, actual events
and results may vary significantly from those included in or
contemplated or implied by our forward-looking statements. The
forward-looking statements included in this news release are made
only as of the date of this news release. We undertake no
obligation to publicly update or review any forward-looking
statement made by us or on our behalf, whether as a result of new
information, future developments, subsequent events or
circumstances, or otherwise, except as required by law.
About Sears Hometown and Outlet Stores, Inc.
Sears Hometown and Outlet Stores, Inc. is a national retailer
primarily focused on selling home appliances, hardware, tools and
lawn and garden equipment. Our Hometown stores (which includes our
Hometown Stores, our Hardware Stores, and our Home Appliance
Showrooms) are designed to provide our customers with in-store and
online access to a wide selection of national brands of home
appliances, tools, lawn and garden equipment, sporting goods and
household goods, depending on the particular format. More than 90%
of our Hometown Stores are operated by independent local dealers or
franchisees.
Our Outlet stores are designed to provide our customers with
in-store and online access to new, one-of-a-kind, out-of-carton,
discontinued, reconditioned, overstocked, and scratched and dented
products across a broad assortment of merchandise categories,
including home appliances, lawn and garden equipment, apparel,
mattresses, sporting goods and tools at prices that are
significantly lower than list prices. As of February 2, 2019, we or our independent dealers
and independent franchisees operated a total of 677 stores across
49 states as well as in Puerto
Rico and Bermuda. Our
principal executive offices are located at 5500 Trillium Boulevard,
Suite 501, Hoffman Estates,
Illinois 60192 and our telephone number is (847)
286-7000.
Sears Hometown and
Outlet Stores, Inc. Condensed Consolidated Statements of
Operations (Unaudited)
|
|
Preliminary
and subject to change
|
|
13 and 14 Weeks
Ended
|
|
52 and 53 Weeks
Ended
|
Thousands
|
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
NET SALES
|
|
$298,520
|
|
$
|
395,774
|
|
|
$
|
1,449,948
|
|
|
$
|
1,719,951
|
|
COSTS AND
EXPENSES
|
|
|
|
|
|
|
|
|
Cost of sales and
occupancy
|
|
239,585
|
|
|
320,022
|
|
|
1,126,752
|
|
|
1,371,408
|
|
Selling and
administrative
|
|
79,222
|
|
|
100,377
|
|
|
349,082
|
|
|
419,567
|
|
Impairment of
property and equipment
|
|
2,089
|
|
|
3,357
|
|
|
2,089
|
|
|
3,357
|
|
Depreciation and
amortization
|
|
3,588
|
|
|
3,129
|
|
|
12,374
|
|
|
13,039
|
|
Gain on the sale of
assets
|
|
—
|
|
|
—
|
|
|
(1,358)
|
|
|
—
|
|
Total costs and
expenses
|
|
324,484
|
|
|
426,885
|
|
|
1,488,939
|
|
|
1,807,371
|
|
Operating
loss
|
|
(25,964)
|
|
|
(31,111)
|
|
|
(38,991)
|
|
|
(87,420)
|
|
Interest
expense
|
|
(4,019)
|
|
|
(2,444)
|
|
|
(14,676)
|
|
|
(8,058)
|
|
Other
income
|
|
18
|
|
|
181
|
|
|
367
|
|
|
925
|
|
Loss before income
taxes
|
|
(29,965)
|
|
|
(33,374)
|
|
|
(53,300)
|
|
|
(94,553)
|
|
Income tax (expense)
benefit
|
|
(304)
|
|
|
$
|
130
|
|
|
$
|
(164)
|
|
|
$
|
(504)
|
|
NET
LOSS
|
|
(30,269)
|
|
|
(33,244)
|
|
|
(53,464)
|
|
|
(95,057)
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER
COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
$
|
(1.33)
|
|
|
$
|
(1.46)
|
|
|
$
|
(2.36)
|
|
|
$
|
(4.19)
|
|
Diluted:
|
|
(1.33)
|
|
|
(1.46)
|
|
|
(2.36)
|
|
|
(4.19)
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average common shares outstanding
|
|
22,702
|
|
|
22,702
|
|
|
22,702
|
|
|
22,702
|
|
Diluted weighted
average common shares outstanding
|
|
22,702
|
|
|
22,702
|
|
|
22,702
|
|
|
22,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sears Hometown and
Outlet Stores, Inc. Consolidated Balance
Sheets (Unaudited)
|
|
Preliminary
and subject to change
|
|
|
|
|
Thousands
|
|
February 2,
2019
|
|
February 3,
2018
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
15,110
|
|
|
$
|
10,402
|
|
Accounts and
franchisee receivables, net
|
|
11,916
|
|
|
14,672
|
|
Merchandise
inventories
|
|
277,285
|
|
|
336,294
|
|
Prepaid expenses and
other current assets
|
|
9,452
|
|
|
7,131
|
|
Total current
assets
|
|
313,763
|
|
|
368,499
|
|
PROPERTY AND
EQUIPMENT, net
|
|
27,731
|
|
|
36,049
|
|
OTHER ASSETS,
net
|
|
2,277
|
|
|
8,140
|
|
TOTAL
ASSETS
|
|
$
|
343,771
|
|
|
$
|
412,688
|
|
LIABILITIES
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Short-term
borrowings
|
|
$
|
93,000
|
|
|
$
|
137,900
|
|
Term Loan,
net
|
|
39,057
|
|
|
—
|
|
Payable to Sears
Holdings Corporation
|
|
14,080
|
|
|
28,082
|
|
Accounts
payable
|
|
19,830
|
|
|
15,741
|
|
Other current
liabilities
|
|
56,009
|
|
|
53,142
|
|
Total current
liabilities
|
|
221,976
|
|
|
234,865
|
|
OTHER LONG-TERM
LIABILITIES
|
|
1,839
|
|
|
2,284
|
|
TOTAL
LIABILITIES
|
|
223,815
|
|
|
237,149
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
Common stock: $.01
par value; 400,000 shares authorized, 22,702 issued and outstanding
in 2018 and 2017, respectively
|
|
227
|
|
|
227
|
|
Capital in excess of
par value
|
|
555,378
|
|
|
555,378
|
|
Accumulated
deficit
|
|
(435,649)
|
|
|
(380,066)
|
|
TOTAL STOCKHOLDERS'
EQUITY
|
|
119,956
|
|
|
175,539
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$
|
343,771
|
|
|
$
|
412,688
|
|
Sears Hometown and
Outlet Stores, Inc. Segment
Results (Unaudited)
|
|
Hometown
|
|
|
|
Preliminary
and subject to change
|
13 Weeks Ended vs.
14 Weeks Ended
|
|
52 Weeks Ended vs.
53 Weeks Ended
|
Thousands, except
for number of stores
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
NET
SALES
|
$
|
188,885
|
|
|
$
|
272,414
|
|
|
$
|
958,518
|
|
|
$
|
1,177,222
|
|
Comparable store
sales %
|
(13.0)
|
%
|
|
(10.5)
|
%
|
|
(6.0)
|
%
|
|
(8.1)
|
%
|
COSTS AND
EXPENSES
|
|
|
|
|
|
|
|
Cost of sales and
occupancy
|
158,219
|
|
|
218,605
|
|
|
768,626
|
|
|
931,078
|
|
Selling and
administrative
|
53,039
|
|
|
68,831
|
|
|
240,955
|
|
|
283,294
|
|
Selling and
administrative expense as a percentage of net sales
|
28.1
|
%
|
|
25.3
|
%
|
|
25.1
|
%
|
|
24.1
|
%
|
Impairment of
property and equipment
|
1,007
|
|
|
2,581
|
|
|
1,007
|
|
|
2,581
|
|
Depreciation and
amortization
|
1,884
|
|
|
1,458
|
|
|
6,263
|
|
|
5,378
|
|
Total costs and
expenses
|
214,149
|
|
|
291,475
|
|
|
1,016,851
|
|
|
1,222,331
|
|
Operating
loss
|
$
|
(25,264)
|
|
|
$
|
(19,061)
|
|
|
$
|
(58,333)
|
|
|
$
|
(45,109)
|
|
|
|
|
|
|
|
|
|
Gross margin
dollars
|
30,666
|
|
|
53,809
|
|
|
189,892
|
|
|
246,144
|
|
Margin
rate
|
16.2
|
%
|
|
19.8
|
%
|
|
19.8
|
%
|
|
20.9
|
%
|
|
|
|
|
|
|
|
|
Total Hometown
stores
|
|
|
|
|
549
|
|
|
768
|
|
|
|
|
|
|
|
|
|
|
|
Outlet
|
|
|
|
|
Preliminary
and subject to change
|
|
13 Weeks Ended vs.
14 Weeks Ended
|
|
52 Weeks Ended vs.
53 Weeks Ended
|
Thousands, except
for number of stores
|
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
NET
SALES
|
|
$
|
109,635
|
|
|
$
|
123,360
|
|
|
$
|
491,430
|
|
|
$
|
542,729
|
|
Comparable store
sales %
|
|
0.2
|
%
|
|
(16.3)
|
%
|
|
(1.8)
|
%
|
|
(9.1)
|
%
|
COSTS AND
EXPENSES
|
|
|
|
|
|
|
|
|
Cost of sales and
occupancy
|
|
81,366
|
|
|
101,417
|
|
|
358,126
|
|
|
440,330
|
|
Selling and
administrative
|
|
26,183
|
|
|
31,546
|
|
|
108,127
|
|
|
136,273
|
|
Selling and
administrative expense as a percentage of net sales
|
|
23.9
|
%
|
|
25.6
|
%
|
|
22.0
|
%
|
|
25.1
|
%
|
Impairment of
property and equipment
|
|
1,082
|
|
|
776
|
|
|
1,082
|
|
|
776
|
|
Depreciation and
amortization
|
|
1,704
|
|
|
1,671
|
|
|
6,111
|
|
|
7,661
|
|
Gain on the sale of
assets
|
|
—
|
|
|
—
|
|
|
(1,358)
|
|
|
—
|
|
Total costs and
expenses
|
|
110,335
|
|
|
135,410
|
|
|
472,088
|
|
|
585,040
|
|
Operating (loss)
income
|
|
$
|
(700)
|
|
|
$
|
(12,050)
|
|
|
$
|
19,342
|
|
|
$
|
(42,311)
|
|
|
|
|
|
|
|
|
|
|
Gross margin
dollars
|
|
28,269
|
|
|
21,943
|
|
|
133,304
|
|
|
102,399
|
|
Margin
rate
|
|
25.8
|
%
|
|
17.8
|
%
|
|
27.1
|
%
|
|
18.9
|
%
|
|
|
|
|
|
|
|
|
|
Total Outlet
stores
|
|
|
|
|
|
128
|
|
|
132
|
|
View original
content:http://www.prnewswire.com/news-releases/sears-hometown-and-outlet-stores-inc-reports-fourth-quarter-and-fiscal-year-2018-results-300820806.html
SOURCE Sears Hometown and Outlet Stores, Inc.