Report: Orchard Supply considers bankruptcy option
Orchard Supply Hardware, the historic California brand that has strived to strike a happy medium between big-box home center and friendly neighborhood hardware store, is considering a bankruptcy option, according to a report in Bloomberg News.
The report also says the California hardware chain is continuing talks with lenders over its $261 million debt and lease obligations.
Early last month, the 89-store San Jose, Calif.-based retailer reported a loss of $118.38 million for the full year, as sales declined slightly to $657.3 million.
Orchard opened its first store in 1931 as a co-op for local farmers. It became part of Sears in the mid-1990s, but it was spun off early in December 2011.
Back in February, Orchard Supply issued an update on its efforts to improve its capital structure.
At that time, CEO Mark Baker commented: “We have made significant strides in transforming the Orchard brand and our business since December 2011 when we became an independent public company. At the same time, we recognize that we did not achieve all of our objectives of the past year and that we continue to face challenges ahead. Our team remains highly focused on our five strategic priorities, with particular emphasis on the execution of our merchandising, marketing and store operations initiatives during the important spring season.
Sears Hometown and Outlet slips in Q1
Sears Hometown and Outlet Stores, the former division of Sears Holdings that spun off in October, posted first quarter sales of $601.1 million, down 3.2% from the first quarter last year.
Net income for the quarter ended May 4 was $15.0 million, down from $20.6 million in last year’s first quarter.
Same-store sales of lawn and garden, the retail company’s second-largest category, dropped 45% in the first two months, the company said, as cool weather took its toll. The category improved significantly in April, when it showed comp-store sales gains of 4.2%
"Sales were below last year due to the impact of unusually cool weather in February and March," said Bruce Johnson, CEO and president. He said comps for most other categories, not counting consumer electronics, were positive during the first quarter.
As of May 4, the Hoffman Estates, Ill.-based company operated 1,253 stores. Sears Hometown stores sell appliances, tools, lawn and garden, sporting goods and household goods. Outlet stores are designed to offer discontinued, obsolete, used or reconditioned merchandise at deep discounts.
More AHMA members report growing sales
A monthly American Hardware Manufacturers Association (AHMA) survey suggests sales are up across the membership.
In comparing current sales levels with year-ago levels, 67% of respondents said sales were higher in May versus year-ago levels, up from 56% in April. For May, 19% reported sales were even, and 14% said sales were below year-ago levels.
“Improving consumer confidence, a rebounding housing market and stability in the employment situation are combining to fuel higher sales for home improvement industry manufacturers,” said Tim Farrell, president and CEO of the Schaumburg, Ill.-based AHMA. “But the potential for even better sales still exists if the overall economic situation in the country begins to show stronger signs of sustainable growth.”
Looking forward six months, 62% of May respondents said they expect sales to be above current levels, up from 56% in April. In May, 29% of respondents said they expect sales to be even in six months, and 9% expect sales to be below current levels.