Sears Hometown and Outlet Stores reports Q3 sales decline

While SHOS narrows its losses, hurricane season had a negative impact on sales.

Sears Hometown and Outlet Stores, Inc. (SHOS) reported third quarter 2017 net sales decreased $101.8 million, or 21%, to $386.0 million from third quarter 2016 net sales of $489 million.

The Hoffman Estates, Ill.-based retailer also reported a net loss of $10.9 million for the third quarter of 2017 compared to a net loss of $93.2 million for the prior-year comparable quarter.  

The company said the sales decline was driven primarily by the impact of closed stores - net of new store openings - and a 9.1% decrease in comparable store sales. Comparable store sales were down 9.9% and 7.4% in Hometown and Outlet locations. As of Oct. 28, 2017, SHOS said it operated, along with its independent retailers and franchisees, a total of 921 stores across all 50 states, Puerto Rico, and Bermuda.

"Last year during the third quarter we made promotional and pricing decisions that proved to be unprofitable. We did not repeat those actions during this year's third quarter, but as a result comparable store sales suffered,” Will Powell, company CEO and president, said in a press release.

Powell also explained that comparable store sales were also negatively impacted by Hurricanes Harvey, Irma, and Maria, which together resulted during the quarter in lost selling days from temporary closures in 102 stores and negatively impacted comp sales performance by 91 basis points.

SHOS said sales through its Hometown segment websites continued to grow: as a percentage of its total sales, the Hometown websites grew 54% in the third quarter of 2017 from the second quarter of 2017.

The company also reported that it is nearing the completion of its America's Appliance Experts (AAE) store refresh program that is designed to offer appliance customers a unique, high-quality shopping experience. SHOS completed 50 AAE remodels in the third quarter of 2017, ending the quarter with 635 total AAE locations, representing 79% of the Hometown Segment stores. Year-to-date the AAE locations achieved better comp store sales and a higher margin rate in appliances than non-AAE locations, the company said.

Commercial sales for the company grew 8% year-over-year in the third quarter but were significantly impacted by Hurricane Harvey: South Texas represents its largest commercial sales market. Year-to-date commercial sales grew 18.9% year-over-year, with 52.9% growth in margin dollars achieved through better commercial pricing disciplines. The store adoption of the program also continues to grow, with 46% of stores participating year-to-date versus 36% at the same point last year.

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