SHOS posts loss in third quarter
Sears Hometown and Outlet Stores pointed to a number of business headwinds and pledged to continue along its long-term transformation plan.
The Hoffman Estates, Illinois-based company reported a net loss of $93.2 million in the third quarter, compared to a net loss of $5.5 million in the year-ago period. Net sales declined 10.8% to $487.8 million.
Sales of home appliances, a bread-and-butter category for the retailer, were down 5.5% on a comparable basis.
“We continued to experience demand headwinds in our Hometown segment due to consumers purchasing our key product categories on-line from our competitors,” said Will Powell, CEO and president. “Until the launch of our Hometown segment transactional websites late in the third quarter, we did not have the ability to serve customers choosing to directly purchase on-line.”
Comparable store sales were down 3.2% and 11.9% in Hometown and Outlet, respectively. The consolidated comparable store sales decrease of 6.0% was primarily due to lower sales in appliances resulting from an aggressive promotional environment, and lower apparel sales in Outlet due to a decrease in product supply from Sears Holdings, the company said. These decreases were partially offset by higher lawn and garden sales in Hometown due to warmer weather in key markets extending the fall clean-up season.
In the third quarter of 2016, SHOS opened four new stores and closed 12 under-performing stores in Hometown. For the first three quarters of 2016, the company opened six stores and closed 51 stores in Hometown and had no openings or closures in Outlet.
The company is not standing still. In addition to launching Hometown segment transactional websites in time for the holidays, initiatives in the third quarter include converting 137 stores to the America’s Appliance Experts program, and an enhanced lease-to-own program.
The company also is investing in a Commercial Sales Program, which continues to experience strong growth as SHOS leverages its physical store presence in rural markets to connect to local commercial customers. It is forecasting more than $25 million in commercial sales for the current fiscal year and expects sales to continue to accelerate as store-owner adoption of this program increases.
