At SHOS, CEO counts the ways to improve

Sears Hometown and Outlet, the franchise-model hardware store retail company that spun from Sears Holdings in 2012, struggled through its fourth quarter, posting a comp-store sales decline of 7.7%.

Operating income for the Hoffman Estates, Illinois-based company swung to negative $9.7 million, compared with positive $7.8 million in the same quarter last year.

"Fourth-quarter results were disappointing, especially in our Hometown segment where adjusted comparable-store sales were down 8.3%,” said Bruce Johnson, CEO. “This segment continues to be adversely affected by the continuing highly promotional environment for major home appliances."

In a statement announcing the company’s performance, Johnson listed initiatives to right the ship:

• Focusing on the top 10 appliance brands;

• Boosting the selling skills of employees;

• Improved service from product selection to delivery;

• Price matching to offer the lowest prices; and

• Improvements in online marketing and user experience at searsoutlet.com.

For the full year, comps decreased 5.7% as operating income swung to a loss of $171.2 million, compared with a positive $61.1 million in the prior year.

“Year-over-year comparisons were unfavorably impacted by our significant franchising activity in the fourth quarter of 2013," Johnson said. “Initial franchise revenues were down $9.1 million in the fourth quarter of 2014 from $10.8 million in the fourth quarter of 2013.  Also, based on recent events and the decline in the financial performance of some of our franchisees, we have recorded a non-cash, incremental $1.5 million provision for losses on franchisee receivables in the fourth quarter of 2014.”

As of Jan. 31, 2015, the company and its independent dealers and franchisees operated a total of 1,260 stores.

The company describes the breakdown of its Hometown and Outlet stores this way: "Our Hometown stores are designed to provide our customers with in-store and online access to a wide selection of national brands of home appliances, tools, lawn and garden equipment, sporting goods and household goods, depending on the particular format. Our Outlet stores are designed to provide our customers with in-store and online access to new, one-of-a-kind, out-of-carton, discontinued, obsolete, used, reconditioned, overstocked, and scratched and dented products across a broad assortment of merchandise categories, including home appliances, lawn and garden equipment, apparel, mattresses, sporting goods and tools at prices that are significantly lower than manufacturers' list prices."