Sears Hometown and Outlet Stores losses continue in Q4

Lower sales and store closures widened fourth quarter losses for Sears Hometown and Outlet Stores.



The hardware, appliance and tool retailer reported its net sales for the quarter ended January 28, 2017, decreased $49.4 million, or 9.2%, to $488.9 million compared to fourth quarter 2015. The company blamed the loss on the impact of closed stores (net of new store openings) and a 4.1% decrease in comparable store sales.



Sears Hometown and Outlet Stores reported a net loss of $45.8 million, compared to a net loss of $22.6 million for the same period last year.



“The increase in our net loss was primarily attributable to a higher operating loss, including store-closing costs, and an increase in income tax expense,” the company said.



For the full year of 2016, net sales decreased $217.7 million, or 9.5%, to $2.1 billion from the 2015 fiscal year. Comparable store sales were down 4.2% and 4.9% in Hometown and Outlet, respectively. The home appliances and tools categories both outperformed the average comparable store sales while lawn and garden and mattresses underperformed to the average, the company said.



The chain recorded an operating loss of $47.7 million and $42.2 million for the full years 2016 and 2015, respectively, blaming lower volume, a lower gross margin rate, $17.7 million of store closing charges, and higher depreciation and amortization, partially offset by a decrease in selling and administrative expenses and a gain on the sale of assets.



The company also reported a net loss of $131.9 million for the full year 2016, compared to a net loss of $27.3 million for 2015. The increase in our net loss was primarily attributable to a higher operating loss, including store-closing costs, and an increase in income tax expense.



The company is not planning to open any new stores in 2017.



“While we were disappointed with our performance in the fourth quarter, we made measurable progress on key strategic initiatives that we believe will improve profitability and strengthen the company's long-term outlook,” said Will Powell, the chain’s CEO and president.



Among these initiatives was the company’s completion of “major system and customer enhancements” on its websites in the fourth quarter, following the launch of three new transactional websites for the Hometown segment at the end of third quarter 2016.



These improvements included the ability to apply for the Sears credit card online with instant approval and use at check-out. In first quarter 2017, “we began a test of free delivery and free shipping offers,” he said. “Within the first quarter we plan to complete additional enhancements that we believe will foster a seamless online leasing experience for our customers.”