Losses widened in the fourth quarter for Sears Hometown and Outlet Stores, the Sears Holdings spinoff.
Hometown, the nation’s fifth-largest appliance retailer, said net losses ballooned to $22.6 million for the period ended Jan. 30, from $4.6 million last year, due in part to a number of one-time charges and expenses. These included $3.3 million in IT investments to streamline product sourcing, assorting and pricing, and nearly $25 million to reacquire 58 stores from franchisees.
The specialty chain said it was dissatisfied with the stores’ poor operating results under the franchisees, and will close some locations and seek to return others to their prior performance levels as corporate-owned stores. President/CEO Will Powell described the store buy-backs as “an important part of our long-term strategy.”
Meanwhile, net sales for the quarter slipped 4.3 percent to $538.3 million due to in part to 12 net store closings and lower online sales commissions from Sears Holdings.
Comp sales were essentially flat, with declines in scratch-and-dent appliances and snow removal products offset by gains in new in-box appliances, and mattresses, furniture, and fitness equipment.
During the quarter the company also converted another 72 stores to its America’s Appliance Experts (AAE) majap format, which is yielding higher margins and comp sales than non-AAE-fitted stores. The chain currently has 178 such departments and plans to convert another 300 stores to the format this year.
The company, together with its franchisees and independent dealer owners, operates about 1,160 stores across the country and generated $1.6 billion in appliance sales in 2014.