Sears Hometown and Outlet Net Falls 27.2 Percent in Q1
HOFFMAN ESTATES, Ill.-Falling sales and rising expenses both cut deeply into net income for Sears Hometown and Outlet Stores in its fiscal first quarter.
Net income totaled $15 million, down 27.2 percent, in the quarter which ended on May 4. Net sales were off 3.2 percent to $601.1 million. Same-store sales fell 5 percent, which included a 6.9 percent decrease in same-store sales in the Hometown stores plus a 1.2 percent bump-up in same-store sales at the Outlet locations.
Bruce Johnson, Sears Hometown and Outlet president and CEO, attributed the sales drops to unseasonably cool weather in February and March. In particular, the weather hurt the company's lawn and garden category, its second largest, for which same-store sales plummeted 45 percent in those two months.
Selling, general and administrative expenses increased 4.3 percent in dollars and gained 153 basis points as a percentage of sales, to 21.2 percent. Expenses rose in part due to higher operating costs incurred from Sears Hometown and Outlet operating as a public company independent of Sears Holdings, from which it separated last October. Gross margin edged up 11 basis points to 25.7 percent, somewhat offsetting the effect of the climb in SG&A.