Majap Promos Sink Sears Hometown’s Profits

Marketplace price promotions took toll on Q4 results
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Sears Hometown and Outlet Stores (SHO), the appliance, hardware and garden specialty chain, said rampant majap discounting contributed to a $4.6 million loss in its fiscal fourth quarter.

Hoffman Estates, Ill. — Sears Hometown and Outlet Stores (SHO), the appliance, hardware and garden specialty retailer, said rampant majap discounting contributed to a $4.6 million loss in its fiscal fourth quarter.

Net sales for the three months, ended Jan. 31, declined 6.7 percent to $562.3 million, and comp-store sales fell 7.7 percent, due in part to an increase in in-store transactions on Sears.com that were fulfilled and recorded by Sears Holdings.

The 1,260-store specialty chain, comprised of independent dealers and franchisees, was spun off from Sears in 2012.

Fourth-quarter sales were also clipped by a year-over-year decline in franchise revenues, while earnings were impacted by a $1.5 million provision for losses on franchisee receivables, stemming from the declining financial performance of some SHO franchisees.

Results were also dragged down by what president/CEO Bruce Johnson described as “the continuing highly promotional environment for major home appliances.”

The discounting was felt most keenly in the company’s Hometown segment, where comp sales decreased 8.3 percent.

Looking ahead, Johnson said SHO is testing several initiatives within its Hometown stores, including a focus on the top 10 majap brands; increased sales training for associates, dealers and franchisees; offering the lowest prices through a price-match program; and enhancing the customer experience from product selection to delivery.

For its Outlet stores, which carry discontinued, scratch-and-dent and refurbished products, SHO is enhancing sourcing, operational efficiencies and online capabilities, including improvements in digital marketing and the user experience, Johnson said.

The company also operates a chain of 5,000-square-foot Home Appliance Showrooms primarily located in strip malls and lifestyle centers of metropolitan areas.

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