Sears Hometown and Outlet Stores, Inc. Reports Third Quarter 2013 Results
HOFFMAN ESTATES, Ill., Dec. 6, 2013 /PRNewswire/ — Sears Hometown and also Outlet Stores, Inc. (NASDAQ: SHOS ) at present reported accomplishments for its quarter ended November 2, 2013.
Achievements for the third quarter included:
Working revenue reduced 7% to $13.2 million compared to $14.1 million in the prior year World wide web income attributable to stockholders decreased by 12% so that you can $7.7 million ($0.33 capital per diluted share) compared for you to $8.8 million ($0.38 money per diluted share) in the prior year Adjusted EBITDA reduced 16% as a way to $13.8 million compared to $16.4 million in the earlier year Comparable retailer sales reduced 2.0% versus the previous year 279,247 shares of the stock were repurchased for $8.4 million
Year-to-date success by means of the third quarter included:
Operating money decreased 35% in an effort to $53.3 million compared for you to $82.3 million in the earlier year Web money attributable to stockholders reduced 37% so that you can $31.8 million ($1.38 dollars per diluted share) compared in an effort to $50.4 million ($2.18 cash per diluted share) in the earlier year Adjusted EBITDA lowered 35% in order to $58.3 million compared for you to $89.9 million in the prior year Similar store sales reduced 1.8% versus the earlier year
Bruce Johnson, Chief Executive Officer together with President, stated “Sales of property appliances increased throughout the quarter, while sales of lawn and garden, client electronics, in addition to apparel (which is basically sold in Outlet Stores) declined. The fourth quarter of 2013 will be the final quarter exactly where we will demand a sizeable unfavorable identical retailer sales effect due to our exit from customer electronics in most stores in our Hometown segment. In our Outlet segment, we carried out the 1st attempt of franchising in addition to began rolling out this brand name which generated far better first franchise revenues in the quarter and permits us so you can carry on our transition to be able to an asset-light, franchised operation. We as well performed a powerful test of furnishings sales in our Outlet stores as well as desire a restricted decision of furniture inventory in location across the format for the holiday season. That this proceeds our technique of shifting our item mix toward improved margin categories, which began last fall with reductions in customer electronics and expansion in mattresses along with tools.”
“October 11th marked the initial anniversary of our separation from Sears Holdings Enterprise. Through the past twelve months, associates at any level need to have helped with the intention to establish the organization together with functional characteristics advantageous of an independent business and also I need to have if you want to fully grasp them for their efforts. For the quarter the year-over-year rise in cost incurred as an outcome of working as an independent public business enterprise totaled 5 million. This was the final quarter that SHO appliance showrooms will operate within Orchard Produce Hardware stores, depending upon Orchard’s choice during its bankruptcy proceedings in an effort to terminate our relationship. We closed 14 areas throughout the quarter, for a whole of 21 Orchard regions closed in 2013. The impact of people closures upon the third quarter was as a way to cut down income as a result of $1.2 million and also EBITDA as a result of $0.3 million.”
Third Quarter Good results
We operate during 2 segments–our Sears Hometown together with the Hardware segment (“Hometown”) together with our Sears Outlet segment (“Outlet”).
World-wide-web sales in the third quarter of 2013 increased $4.2 million, or 0.7%, in an effort to $561.1 million from the third quarter of 2012. That this improvement was driven really via superior very first franchise revenues (which had been $7.8 million in the third quarter of 2013 compared so they can $1.5 million in the third quarter of 2012) and sales from fresh stores internet of closures). Partially offsetting individual increases were a 2.0% cut down in comparable store sales in addition to a poor effect of the calendar shift due so that you can the 53rd week in 2012.
The identical shop sales decrease of 2.0% was comprised of a 1.5% decrease in Hometown and also a 3.4% cut down in Outlet. The 2.0% lessen was especially driven via lessening key appliances together with apparel sales in Outlet, minimizing Hometown lawn in addition to garden sales, lessening tools-category sales in each segment, along with lower buyer electronics sales following our planned exit from this category in most Hometowns stores. People’s decreases were partially offset by higher enormous appliance sales in my Hometown.
Gross margin was $135.5 million, or 24.1% of internet sales, in the third quarter of 2013 compared to $138.4 million, or 24.9% of online sales, in the third quarter of 2012. The decrease in gross margin rate was rather driven as a result of one minimize margins upon products sales, 2 $3.7 million of Outlet distribution center expenditures that had been separated from selling retailer expenditures and also had been reflected in selling as well as administrative price in 2012, 3 a $2.3 million warranty price timing advantage in 2012, 4 $0.9 million pretty consisting of significantly more occupancy costs incurred as an outcome of working as an independent business enterprise given that the Separation, in addition to 5 lower Outlet merchandise-liquidation cash. Those decreases were partially offset as a result of the strengthening in, to begin with, franchise revenues, a $2.1 million raise in warranty reserves in 2012, and also lower occupancy fees resulting from the conversion of Company-operated stores so as to franchisee-operated stores.
Selling along with administrative expenditures lowered with the intention to $121.7 million, or 21.7% of world wide web sales, in the third quarter of 2013 from $122.1 million, or 21.9% of web sales, in the earlier year quarter. The lesson was particularly due for you to a reduction in payroll along with advantages exact same so that you can franchise conversions together with $3.7 million in Outlet distribution-center costs that were separated from selling store expenses and also were reflected in selling as well as administrative value in the third quarter of 2012 as well as reflected in gross margin in the third quarter of 2013. People decreases were partially offset through an estimated $4.1 million in much better expenditures from working as an independent organization with superior owner commissions in each Hometown together with Outlet particularly same in an effort to the conversion of Company-operated stores as a way to franchisee-operated stores), and better marketing fees in Hometown.
We recorded a working capital of $13.2 million in addition to $14.1 million in the third quarters of 2013 and 2012, respectively. The $0.9 million lower in operating cash was driven as a result of a lower gross profit rate partially offset by superior internet sales, cut down selling as well as administrative fees in addition to a $1.6 million obtain upon the sale of an Outlet retailer location. Included in those impacts on year-over-year working income was an estimated $5.0 million of better working expenses in the third quarter of 2013 incurred as a result of operating as an independent public firm mainly because of our separation from Sears Holdings Business enterprise in October 2012.
Economic Place
We had capital and also revenue equivalents of $21.5 million as of November two 2013, $21.8 million as of October 27, 2012, together with $20.1 million as of February two 2013. Availability as of November 2 2013 below our Credit Arrangement dated as of October 11, 2012, amongst the Small business its subsidiaries, Financial institution of America, N.A., as well as other lenders (the “Senior ABL Facility”) was $158.7 million with $87.9 million drawn together with $3.4 million of letters of credit beneficial under the facility. By means of the third quarter of 2013, we financed our operations together with investments primarily with short-term borrowings under the Senior ABL Facility. Our principal will need for liquidity was with the intention to fund inventory purchases in addition to money costs together with common corporate explanations.
Whole goods inventories were $488.6 million at November two 2013 in addition to $429.4 million on October 27, 2012. Merchandise inventories increased extremely due to better inventory in residence appliances from items resets in the Hometown and far better flow of scratch-and-dent items along with opportunistic buys in Outlet partially offset via a loss in buyer electronics inventory resulting from our exit of this category in most Hometown stores along with cutting down apparel inventory in Outlet due so as to a decline in receipts compared for you to the prior year.
Throughout the quarter the Organization repurchased 279,247 shares of stock for $8.4 million at an average cost of $29.97 as a portion of the $25 million share repurchase approach authorized by the Company’s Board of Directors on August 28, 2013.
Adjusted EBITDA
In addition in order to have our online funds determined in accordance with GAAP, for motives of evaluating operating overall performance, we at times utilize Adjusted Cash Ahead of Attention Taxes, Depreciation in addition to Amortization, or “Adjusted EBITDA.” Right after the Separation, our handle utilized Adjusted EBITDA to be able to examine the working performance of our organization for identical periods. Though Adjusted EBITDA is a non-GAAP measurement, management believes that it may well be a significant indicator of operating performance since it excludes one the effects of financing in addition to investing activities via eliminating interest together with depreciation expenditures in addition to two shop closing bills as well as severance fees that might differ a lot from the period if you want to period together with need a disproportionate impact in an offered period, which affects the comparability of achievement. Through the 13 as well as 39 weeks ended November two 2013 in addition to the 13 weeks ended October 27, 2012, we incurred zero retailer closing and severance prices. Through the 39 weeks that ended October 27, 2012, we incurred $0.8 million of shop closing costs in addition to severance fees. Adjusted EBITDA should not be utilized as a result of investors or other third parties as the sole basis for formulating investment choices as Adjusted EBITDA excludes a number of helpful funds together with non-cash recurring troubles. Adjusted EBITDA really should not be thought to be a replacement for GAAP measurements.
The immediately after table presents a reconciliation of Adjusted EBITDA so as to World wide web funds the most identical GAAP measure, for every one of the periods indicated:
13 Weeks Ended
39 Weeks Ended
Thousands
November 2 2013
October 27, 2012
November 2 2013
October 27, 2012
Internet Capital
$
7,695
$
8,760
$
31,826
$
50,420
Funds tax value
5,191
5,629
20,812
32,689
Other revenue
(460)
(382)
(1,306)
(968)
Awareness cost
738
70
1,969
111
Operating income
13,164
14,077
53,301
82,252
Depreciation
2,177
2,282
6,569
6,815
Store closing prices and also severance costs
797
Get on the sale of assets
(1,567)
(1,567)
Adjusted EBITDA
$
13,774
$
16,359
$
58,303
$
89,864
Forward-Looking Statements
This news release includes forward-looking statements (the “forward-looking statements”). The forward-looking statements are topic in order to substantial risks together with uncertainties that may perhaps result in our genuine results efficiency as well as achievements in the long term for you to be materially diverse from the future accomplishment future overall performance along with long term achievements expressed or implied by way of the forward-looking statements. Forward-looking statements comprise of devoid of limitations, information, and facts regarding our long-term monetary efficiency business enterprise technique plans, goals, and also objectives. The forward-looking statements are depending upon the given beliefs as well as expectations of our control. The just after challenges in between others might possibly trigger true results for you to vary materially from those set forth in the forward-looking statements: our continued reliance on Sears Holdings Enterprise (“Sears Holdings”) for most products together with services that are necessary in an effort to the useful operation of our company our conceivable need in order to depend upon Sears Holdings past the expiration or previous termination via Sears Holdings of various of our agreements with Sears Holdings; the willingness along with talent of Sears Holdings with the intention to meet what we think are Sears Holdings’ contractual obligations so as to us; our ability in order to appropriately solve present in addition to regardless of whether every single arise, long term contractual disputes with Sears Holdings; our talent so as to present merchandise along with services that our shoppers need including individuals under the KENMORE , CRAFTSMAN , along with DIEHARD brands (which brands are owned via subsidiaries of Sears Holdings); the sale by Sears Holdings and its subsidiaries so that they can other retailers that compete with us of important household appliances together with other merchandise branded with the Kenmore, Craftsman, or DieHard brands; our talent as a way to appropriately control our inventory levels and implement initiatives for you to increase inventory manage as well as other functions competitive circumstances in the retail industry international economic situations in addition to business enterprise uncertainty, the availability of buyer and also industrial credit, adjustments in consumer confidence tastes, preferences and spending, as well as modifications in vendor relationships; the fact that our past performance oftentimes as reflected on our historical economic statements, may possibly not be indicative of our long term functionality as a result of, among other things the consolidation of Hometown along with Outlet into a single business enterprise entity, the Separation, working as a standalone home business entity, together with the impact of increased expenditures due to a minimize in our getting power immediately after the Separation in addition to other losses of advantages identical with getting wholly owned by means of Sears Holdings together with its subsidiaries; our agreements same with the intention to the rights delivering together with Separation transactions along with our continuing relationship with Sears Holdings had been negotiated despite the fact that we were a subsidiary of Sears Holdings in addition to we could possibly require acquired several terms from unaffiliated third parties; anticipated limitations together with restrictions in the Senior ABL Facility as well as comparable agreements governing our indebtedness and our ability to organisation our indebtedness; our skill so as to decide to purchase significantly more financing upon suitable terms; our dependence upon independent dealers along with independent franchisees in order to function their stores profitably and in a way consistent with our ideas along with standards; our dependence on sources outside the U.S. for tremendous amounts of our items inventories; impairment prices for goodwill or fixed-asset impairment for long-lived assets; our skill to entice motivate together with retain significant executives as well as other employees the effect of increased expenses very same with being an independent business our talent in order to sustain successful internal controls as a public enterprise our skill for you to recognize the benefits that we expect in order to realize from the Separation; low trading amount of our normal stock due if you want to limited liquidity or a lack of analyst coverage; the effect upon our ordinary stock together with our overall functionality as a result of our primary stockholders’ talent so as to exert manage more than us; along with other risks, uncertainties, along with factors discussed in our most current Quarterly Content on Form 10-Q together with other filings with the Securities along with Exchange Commission. We intend the forward-looking statements so that you can speak just as of the date of that this news release, along with we do not undertake if you want to update or revise the forward-looking statements as far more understanding becomes out there.
About Sears Hometown along with Outlet Stores, Inc.
Sears Hometown along with Outlet Stores, Inc. is a national shop extremely focused on selling house appliances, hardware, tools and also lawn and garden gear. Our Hometown stores are produced with the intention to supply our consumers with in-store together with net access in order to a wide selection of national brands of dwelling appliances, tools, lawn in addition to garden equipment sporting goods and also property goods depending upon the different format. Our Outlet stores are created to be able to supply our consumers with in-store as well as world wide web access for you to new one-of-a-kind, out-of-carton, discontinued, obsolete, applied reconditioned, overstocked, and also scratched and dented goods across a wide variety of products categories, such as property appliances, lawn along with garden gear apparel, mattresses, sporting products together with tools at prices that much lessen than manufacturers’ suggested retail rates. As of November two 2013, we and also our dealers along with franchisees operated 1,239 stores across nearly every 50 states as nicely as in Puerto Rico along with Bermuda. Our main executive offices are identified at 5500 Trillium Boulevard, Suite 501, Hoffman Estates, Illinois 60192 as well as our phone number is (847) 286-7000.
Sears Hometown together with Outlet Stores, Inc.
Condensed Consolidated Statements of Capital
(Unaudited)
13 Weeks Ended
39 Weeks Ended
Thousands, except per-share amounts
November two 2013
October 27, 2012
November two 2013
October 27, 2012
Internet SALES
$
561,068
$
556,903
$
1,819,084
$
1,822,445
Fees Together with Fees
Price of sales along with occupancy
425,596
418,490
1,380,966
1,365,347
Selling as well as administrative
121,698
122,054
379,815
368,031
Depreciation
2,177
2,282
6,569
6,815
Acquire on the sale of assets
(1,567)
(1,567)
Total fees and also expenditures
547,904
542,826
1,765,783
1,740,193
Working dollars
13,164
14,077
53,301
82,252
Consideration cash cost
(738)
(70)
(1,969)
(111)
Other capital
460
382
1,306
968
Cash prior to funds taxes
12,886
14,389
52,638
83,109
Funds tax expense
(5,191)
(5,629)
(20,812)
(32,689)
Online Money
$
7,695
$
8,760
$
31,826
$
50,420
World wide web Capital PER Common SHARE ATTRIBUTABLE So that you can STOCKHOLDERS
Straightforward
$
0.33
$
0.38
$
1.38
$
2.18
Diluted:
$
0.33
$
0.38
$
1.38
$
2.18
Very simple weighted common average shares great
22,999
23,100
23,066
23,100
Diluted weighted average frequent shares fantastic
22,999
23,100
23,070
23,100
Sears Hometown along with Outlet Stores, Inc.
Condensed Consolidated Stability Sheets (Unaudited)
Thousands
November 2 2013
October 27, 2012
February 2 2013
ASSETS
Provide ASSETS
The money along with cash equivalents
$
21,487
$
21,841
$
20,068
Accounts receivable
17,207
13,905
10,986
Items inventories
488,626
429,407
428,437
Prepaid expenses as well as another offer you assets
8,113
12,301
14,321
Complete provide assets
535,433
477,454
473,812
Property Together with Gear world-wide-web
49,544
54,088
53,383
GOODWILL
167,000
167,000
167,000
LONG-TERM DEFERRED TAXES
63,916
70,648
69,001
OTHER ASSETS
32,115
22,509
22,607
Total ASSETS
$
848,008
$
791,699
$
785,803
LIABILITIES
Present LIABILITIES
Short-term borrowings
$
87,900
$
47,100
$
20,000
Payable for you to Sears Holdings Firm
57,414
77,687
79,491
Accounts payable
31,727
29,228
31,830
Other offer liabilities
74,306
76,265
83,211
Deliver component of money lease obligations
1,082
1,499
1,463
Total offer you liabilities
252,429
231,779
215,995
Funds LEASE OBLIGATIONS
98
870
769
OTHER LONG-TERM LIABILITIES
5,139
2,423
2,752
Entire LIABILITIES
257,666
235,072
219,516
STOCKHOLDERS’ EQUITY
Whole STOCKHOLDERS’ EQUITY
590,342
556,627
566,287
Whole LIABILITIES In addition to STOCKHOLDERS’ EQUITY
$
848,008
$
791,699
$
785,803
Sears Hometown in addition to Outlet Stores, Inc.
Segment Results
(Unaudited)
Hometown
13 Weeks Ended
39 Weeks Ended
Thousands, except for number of stores
November two 2013
October 27, 2012
November two 2013
October 27, 2012
Net sales
$
413,171
$
414,985
$
1,361,908
$
1,403,218
Same retailer sales %
(1.5)
%
4.4
%
(2.9)
%
10
%
Price of sales and occupancy
318,362
316,820
1,040,750
1,066,728
Gross margin revenue
94,809
98,165
321,158
336,490
Margin rate
22.9
%
23.7
%
23.6
%
24.0
%
Selling and administrative
94,818
94,149
299,175
287,400
Selling along with administrative cost as a percentage of world wide web sales
22.9
%
22.7
%
22.0
%
20.5
%
Depreciation
760
797
2,372
2,423
Whole expenses and fees
413,940
411,766
1,342,297
1,356,551
Operating money
$
(769)
$
3,219
$
19,611
$
46,667
Entire Hometown stores
1,108
1,111
Outlet
13 Weeks Ended
39 Weeks Ended
Thousands, except for quantity of stores
November two 2013
October 27, 2012
November 2 2013
October 27, 2012
Online sales
$
147,897
$
141,918
$
457,176
$
419,227
Exact same retailer sales %
(3.4)
%
(0.8)
%
1.9
%
0.6
%
Cost of sales and also occupancy
107,234
101,670
340,216
298,619
Gross margin revenue
40,663
40,248
116,960
120,608
Margin price
27.5
%
28.4
%
25.6
%
28.8
%
Selling in addition to administrative
26,880
27,905
80,640
80,631
Selling and administrative cost as a percentage of web sales
18.2
%
19.7
%
17.6
%
19.2
%
Depreciation
1,417
1,485
4,197
4,392
Obtain on the sale of assets
(1,567)
(1,567)
Complete expenditures as well as expenditures
133,964
131,060
423,486
383,642
Operating funds
$
13,933
$
10,858
$
33,690
$
35,585
Full Outlet stores
131
126