SHOS calls foul over online constraints

Sears Hometown and Outlet Stores posted a net loss in fiscal 2015 of $27.3 million, and sales have declined for two straight years.

One problem, according to the SHOS 10K filing, is the growth of online sales around the industry in important product categories, especially home appliances.

“We believe that the results of operations for our businesses in fiscal 2015 were, and will continue to be, adversely affected by the continuing growth at other retailers of online sales …” the company said.

Sears Hometown and Outlet Stores would like to do more, but the deal that spun off SHOS from SHLD in 2012 has led to agreements that limit SHOS’s digital powers.

“Our rights to engage in our own online initiatives that would leverage sears.com, and our rights to engage on our own terms and conditions in our own online initiatives that would be independent of sears.com, are constrained by the SHO-Sears Holdings Agreements,” the company said in its filing.

“These adverse effects likely will increase over time. We have, for some time, been engaging in negotiations with Sears Holdings regarding the elimination of these constraints and the cessation of actions, but we are unable to determine the outcome of these negotiations.”

There are 855 Hometown Stores described as primarily independently operated stores, predominantly located in smaller communities, and offering home appliances, lawn and garden equipment, tools, sporting goods and household goods.