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Sears Hometown and Outlet Stores Inc

Sears Hometown and Outlet Stores Inc (SHOS)

3.40
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Closed March 29 04:00PM
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Key stats and details

Current Price
3.40
Bid
3.50
Ask
3.54
Volume
-
0.00 Day's Range 0.00
0.00 52 Week Range 0.00
Previous Close
3.40
Open
-
Last Trade
Last Trade Time
Average Volume (3m)
-
Financial Volume
-
VWAP
-

SHOS Latest News

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PeriodChangeChange %OpenHighLowAvg. Daily VolVWAP
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SHOS Discussion

View Posts
bar1080 bar1080 4 years ago
!!! WSJ: "Hometown store owners pay rent and the costs of keeping up their shops but don’t own the merchandise they stock. The goods are owned by the corporate parent, which pays them a commission on sales. Several owners said the flow of goods dried up once Mr. Lampert acquired full control of Hometown."
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bar1080 bar1080 4 years ago
WSJ: "Sears Woes Hit Hometown Stores

Operators of the appliance retailer, also owned by Eddie Lampert, say they can’t get merchandise

"At a Sears Hometown store in Barre, Vt., shelves are bare of Craftsman tools, Whirlpool washing machines and Kenmore ovens. With little product to sell, owner Tom Coulter said he is turning customers away daily.

When the store has merchandise, the prices are often lower on the website of its sister chain, Sears. Mr. Coulter said his commission and bonus will be penalized if he matches sears.com’s prices, though he is able to match the prices of other chains without penalty.

Four years ago, the store was profitable. Today, it is barely breaking even. Mr. Coulter and his wife haven’t taken a salary since the spring, and they are struggling to pay their bills. If they walk away from their store, they could get sued. A similar story is playing out at Hometown stores across the country, the latest chapter in financier Edward Lampert’s dismantling of Sears..." more
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Snowman2 Snowman2 5 years ago
Soaring is the way I like my stocks
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Snowman2 Snowman2 5 years ago
Bulls bulls bulls yeeeeeeee!!!
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Snowman2 Snowman2 5 years ago
Look at all that green :)
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whytestocks whytestocks 5 years ago
News: $SHOS Liberty Tax, Inc. To Acquire Outlet Business From Sears Hometown And Outlet Stores, Inc.

VIRGINIA BEACH, Va. and HOFFMAN ESTATES, Ill. , Aug. 27, 2019 /PRNewswire/ -- Liberty Tax, Inc. ("Liberty Tax") (OTC Pink: TAXA), the parent company of Liberty Tax Service and Buddy's Home Furnishings, and Sears Hometown and Outlet Stores, Inc. ("Sears Hometown") (NASDAQ: SHOS) today an...

Find out more Liberty Tax, Inc. To Acquire Outlet Business From Sears Hometown And Outlet Stores, Inc.
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whytestocks whytestocks 5 years ago
News: $SHOS Liberty Tax, Inc. to Acquire Outlet Business From Sears Hometown and Outlet Stores, Inc.

VIRGINIA BEACH, Va. and HOFFMAN ESTATES, Ill., Aug. 27, 2019 (GLOBE NEWSWIRE) -- Liberty Tax, Inc. (“Liberty Tax”) (OTC Pink: TAXA), the parent company of Liberty Tax Service and Buddy’s Home Furnishings, and Sears Hometown and Outlet Stores, Inc. (“Sears Ho...

Find out more Liberty Tax, Inc. to Acquire Outlet Business From Sears Hometown and Outlet Stores, Inc.
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whytestocks whytestocks 5 years ago
News: $SHOS Transform Holdco LLC To Acquire Sears Hometown And Outlet Stores, Inc.

All-Cash Transaction Will Reunite the Sears Family of Stores Acquisition is Subject to a Marketing Process and Potential Premerger Sale of Outlet Segment to a Third Party HOFFMAN ESTATES, Ill. , June 3, 2019 /PRNewswire/ -- Transform Holdco LLC ("Transform" or "the new Sears...

In case you are interested https://marketwirenews.com/news-releases/transform-holdco-llc-to-acquire-sears-hometown-and-outlet-stores-inc--8287166.html
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Enterprising Investor Enterprising Investor 5 years ago
Transform Holdco LLC To Acquire Sears Hometown And Outlet Stores, Inc. (6/03/19)

All-Cash Transaction Will Reunite the Sears Family of Stores

Acquisition is Subject to a Marketing Process and Potential Premerger Sale of Outlet Segment to a Third Party

HOFFMAN ESTATES, Ill., June 3, 2019 /PRNewswire/ -- Transform Holdco LLC ("Transform" or "the new Sears"), a leading integrated retailer and home to Sears and Kmart, and Sears Hometown and Outlet Stores, Inc. ("Sears Hometown") (NASDAQ: SHOS) today announced that they have entered into a definitive merger agreement whereby Transform will acquire the outstanding shares of Sears Hometown not owned by ESL Investments, Inc. and its affiliates for a price of $2.25 per share in cash, subject to an upward adjustment in the event a sale of Sears Hometown's Outlet Segment has occurred that satisfies criteria specified in the merger agreement. ESL Investments, Inc. and its affiliates, the majority owners of Transform, presently hold 58% of the outstanding shares of Sears Hometown.

The transaction will reunite Sears and Kmart with Sears Hometown, which was spun off from Sears Holdings Corporation, the former parent company of Sears and Kmart, in 2012. Having these businesses under common ownership will accelerate Transform's strategy of growing its smaller store format by adding Sears Hometown stores. It will also expand the company's footprint as a multi-channel business that can serve customers through a variety of shopping experiences to meet their needs, provide growth for Transform's marquee brands, including Kenmore® and DieHard®, and increase opportunities for Sears Home Services and Financial Services businesses, as well as the Shop Your Way® social shopping destination and rewards program.

Edward S. Lampert, Chairman of Transform, said, "We are excited to bring Sears Hometown, its associates and network of independent dealers and franchisees back into the Sears and Kmart family. Our investment demonstrates our commitment to growing Transform for the benefit of our members and customers, associates, vendors and communities across the country. While, initially, the companies will operate independently, we see many opportunities where we can partner to serve our customers better and enjoy efficiencies of scale once these businesses are under one roof."

Will Powell, Chief Executive Officer and President of Sears Hometown and Outlet Stores, said, "I believe this is the best path forward for Sears Hometown and serves the interests of all our constituents, including our customers, associates, dealers, franchisees and stockholders. We believe that reuniting our Sears Hometown segment stores with Transform's Sears full-line stores will result in a more consistent customer experience across Sears branded storefronts, generate higher total revenues and leverage efficiencies of scale to improve costs and margins, all of which could lead to improved profitability for Sears Hometown's dealers and franchisees."

Sears Hometown presently maintains a network of 491 Hometown stores and 126 Outlet stores located in 49 states, Puerto Rico and Bermuda and generated $1.4 billion in net sales in 2018. When the two companies are combined, they will rank as the third largest appliance retailer in the United States in terms of sales.

Under the terms of the merger agreement, Sears Hometown has a specified period of time in which it can market and sell its Sears Outlet and Buddy's Home Furnishing Stores businesses (together, the "Outlet Segment") to a third party for not less than $97.5 million. If the Outlet Segment is sold in accordance with the terms of the merger agreement, it will not be acquired by Transform in the acquisition of Sears Hometown.

At the completion of the acquisition of Sears Hometown, each share of Sears Hometown's outstanding common stock not owned by ESL Investments, Inc. and its affiliates will be converted into the right to receive a base amount in cash equal to $2.25 per share. If Sears Hometown completes a sale of the Outlet Segment in accordance with the terms of the merger agreement, this base amount will be subject to an upward adjustment equal to (i) the excess, if any, of the net proceeds received by Sears Hometown as a result of any sale of the Outlet Segment over $97.5 million, divided by (ii) the aggregate number of shares of Sears Hometown common stock and unvested Sears Hometown restricted stock units issued and outstanding as of the closing of the merger transaction. Sears Hometown must enter into an agreement to sell the Outlet Segment no later than August 24, 2019 (extendable by 10 days in specified circumstances) and the sale must be completed by October 23, 2019 (extendable by 15 days in specified circumstances). Under the terms of the Merger Agreement, Transform will have the opportunity to match the economic terms of any proposed sale of the Outlet Segment to a third party that is expected to result in net proceeds to Sears Hometown of less than $120 million.

Will Powell, Chief Executive Officer and President of Sears Hometown and Outlet Stores, said, "As we have been publicly reporting, the Outlet business is profitable and has a unique business strategy which should enable further growth. We are now beginning the Outlet Segment sale process with interested parties, while continuing to operate the Outlet stores without any business interruption."

"We will work with Transform over the coming months to ensure that our dealer network is in a position to leverage the best of Transform's unique brands, services and online capabilities to bring additional value to their customers."
The transaction was negotiated and approved by a special committee of Sears Hometown's board of directors, consisting of an independent and disinterested director.

The closing of the transaction is expected to take place in Sears Hometown's third quarter of 2019, at which time Sears Hometown will cease to be a publicly-held corporation.

Cleary Gottlieb Steen & Hamilton LLP is serving as legal counsel for Transform Holdco LLC. Shearman & Sterling LLP is serving as legal counsel and PJ SOLOMON is serving as financial advisor for Sears Hometown's special committee.

About Transform Holdco LLC

Transform Holdco LLC is a leading integrated retailer focused on seamlessly connecting the digital and physical shopping experiences to serve its members – wherever, whenever and however they want to shop. Transform Holdco is home to Shop Your Way®, a social shopping platform offering members rewards for shopping at Sears, Kmart and other retail partners. Transform Holdco operates through its subsidiaries with full-line and specialty retail stores across the United States.

About Sears Hometown and Outlet Stores, Inc.

Sears Hometown and Outlet Stores, Inc. is a national retailer primarily focused on selling home appliances, hardware, tools and lawn and garden equipment. Its Hometown stores (which includes its Hometown Stores, its Hardware Stores, and its Home Appliance Showrooms) are designed to provide its 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. More than 90% of its Hometown Stores are operated by independent local dealers or franchisees.

Its Outlet stores are designed to provide its customers with in-store and online access to new, one-of-a kind, out-of-carton, discontinued, 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 list prices.

https://www.prnewswire.com/news-releases/transform-holdco-llc-to-acquire-sears-hometown-and-outlet-stores-inc-300860416.html
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barnovage barnovage 5 years ago
Liquidation is the best thing that could happen to this and Eddie booted the directors that wanted to do that. Shareholders should take cues from Sears Canada and now Shldq. Theres only one way this is going to end and thats in bk and ultimately in Eddies pocket.
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bar1080 bar1080 5 years ago
Bad news as Sears closes brand new small-format store.

https://www.chicagotribune.com/suburbs/oak-brook/news/ct-dob-sears-closing-tl-0425-story.html
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barnovage barnovage 5 years ago
Eddie should just wait another 12 months. It will be cheaper then.
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emit emit 5 years ago
Up we go
https://www.marketwatch.com/story/eddie-lampert-affiliate-makes-a-bid-for-sears-hometown-outlet-stores-2019-04-08?mod=mw_quote_news


e
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bar1080 bar1080 5 years ago
What a soap opera! I'd add some thoughts but the only SHOS stores around me closed some time ago. Presumably their franchisee/owners were cleaned out.

Sad.

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whytestocks whytestocks 5 years ago
News: $SHOS Wolf Popper LLP Investigates the Proposed Acquisition of Sears Hometown and Outlet Stores, Inc. by Its Controlling Shareholder, Edward Lampert

NEW YORK , April 8, 2019 /PRNewswire/ -- Wolf Popper LLP is investigating potential claims on behalf of investors in Sears Hometown and Outlet Stores, Inc. (Nasdaq: SHOS), concerning the proposed going private transaction of Sears Hometown by Edward Lampert , Sears Hometown's majori...

In case you are interested https://marketwirenews.com/news-releases/wolf-popper-llp-investigates-the-proposed-acquisition-of-sears-hometown-and-outlet-stores-inc-by-its-controlling-shareholder-edward-lampert-7965704.html
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Enterprising Investor Enterprising Investor 5 years ago
Is anyone really shocked?
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whytestocks whytestocks 5 years ago
News: $SHOS Sears Hometown and Outlet Stores, Inc. Announces Receipt Of Transaction Proposal From Transform Holdco

HOFFMAN ESTATES, Ill. , April 8, 2019 /PRNewswire/ -- Sears Hometown and Outlet Stores, Inc. ("our," "we," or the "Company") (NASDAQ: SHOS) today announced that it received a proposal (the "Proposal") during the evening on Friday, April 5 , from Transform Holdco LLC ("Transform"), an ent...

In case you are interested https://marketwirenews.com/news-releases/sears-hometown-and-outlet-stores-inc-announces-receipt-of-transaction-proposal-from-transform-holdco-7963282.html
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whytestocks whytestocks 5 years ago
News: $SHOS Sears Hometown And Outlet Stores, Inc. Reports Fourth Quarter And Fiscal Year 2018 Results

HOFFMAN ESTATES, Ill. , March 29, 2019 /PRNewswire/ -- Sears Hometown and Outlet Stores, Inc. ("SHO," "our," "we," or the "Company") (NASDAQ: SHOS) today reported results for its fiscal year and quarter ended February 2, 2019. Overview of Unaudited Results Results for the ...

Read the whole news https://marketwirenews.com/news-releases/sears-hometown-and-outlet-stores-inc-reports-fourth-quarter-and-fiscal-year-2018-results-7911620.html
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tk2007 tk2007 5 years ago
I just recently know about SHOS. I think SHOS got dragged down with Sears when it filed chap 11. Filings show ESL has more than 4M shares of SHOS. I don't know if Eddie has any other roles in SHOS or not. Regardless, I think SHOS is undervalued, its current market cap ~$52M.
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Scotttrader80 Scotttrader80 5 years ago
With so many opines about what $SHLDQ does and doesnt own $SHOS has me puzzled, its as if they are a secret that no one has discovered yet, gotta do some due
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Scotttrader80 Scotttrader80 5 years ago
Interesting, very Interesting
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Vilhelm_Bock_LLC Vilhelm_Bock_LLC 5 years ago
Good Argument.
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Scotttrader80 Scotttrader80 5 years ago
I wonder how many other Sears entities are publicly traded in addition to this "subsidiary"?
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Vilhelm_Bock_LLC Vilhelm_Bock_LLC 5 years ago
Fox Business News Network just stated Walmart is up 43% in online sales this past year. But warned to look out for up and comers and that SEARS might surprise everyone.
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Vilhelm_Bock_LLC Vilhelm_Bock_LLC 5 years ago
Morning Boys, Brought ya Breakfast!

http://shos.com/about-sears-hometown-stores/
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Scotttrader80 Scotttrader80 5 years ago
Is this one tangled up in the controversy like the parent $SHLDQ is? Just asking not looking to stir the soup.
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tk2007 tk2007 5 years ago
$SHOS should be trading at book value $6.62 pps
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Scotttrader80 Scotttrader80 5 years ago
More so now that the bankruptcy drama is winding up
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Sammypt Sammypt 5 years ago
I like this company. Seems like there is potential here.
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Enterprising Investor Enterprising Investor 6 years ago
Sears Hometown and Outlet Stores, Inc. Reports Second Quarter 2018 Results (9/07/18)


HOFFMAN ESTATES, Ill., Sept. 7, 2018 /PRNewswire/ -- Sears Hometown and Outlet Stores, Inc. ("SHO," "our," "we," or the "Company") (NASDAQ : SHOS ) today reported results for the quarter ended August 4, 2018.

Overview of Unaudited Results

Results for the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017 included:

Net loss decreased $20.1 million to $9.3 million from $29.4 million

Loss per share decreased $0.89 to $0.41 loss per share from $1.30 loss per share

Comparable store sales increased 0.9%

Adjusted EBITDA increased $8.5 million to $11.3 million from $2.8 million

Will Powell, Chief Executive Officer and President, said, "In the second quarter the positive impact of our business transformation initiatives drove positive comparable store sales in a quarter for the first time in five years and an $8.5 million increase in adjusted EBITDA. The first half of the year represented an improvement of $20.1 million in adjusted EBITDA. In addition to improving our profitability, we reduced our total borrowings by $18.4 million during the second quarter. Transforming a business is a challenging task and we still have much to do to finish the work we have started. However, I am encouraged by the fact that during four of the last five quarters, we have reported positive and increased adjusted EBITDA compared to the prior year. I believe this demonstrates that our initiatives have traction in our business and, in many cases, have reached a scale where they now have a significant impact on our results."

We continue to implement our strategic plan to transform our business. Meaningful progress is evident across many of our initiatives that serve to enable this change. Examples include:

Changes to our Outlet pricing strategy and improvements to our as-is appliance sourcing led to decreased markdowns and margin improvement of over 500 basis points in our Outlet segment. Additionally, the Outlet segment began to achieve positive comparable store sales in July as we anniversaried the impact of our pricing changes. Due to the ongoing improvement in our Outlet business, we opened one Outlet store in the second quarter, opened an additional Outlet store in the third quarter, and plan to open one or two additional Outlet stores before the end of our 2018 fiscal year.

In the second quarter 2018 lease-to-own comparable sales increased 39.9% and leasing's share of total sales increased to 8.1%, up 233 basis points compared to the second quarter 2017.

We opened one additional Buddy's Home Furnishings store, bringing total openings to six since January 2018. We opened these rent-to-own stores as a franchisee, enabling us to benefit from Buddy's extensive expertise and systems infrastructure in this business in which we own the inventory that we rent to our customers. Buddy's Home Furnishings is the third largest rent-to-own operator in the United States with over 330 locations nationwide. Its principal owner, Vintage Capital Management, LLC, reached an agreement in the second quarter 2018 to acquire Rent-A-Center, Inc. We plan to open three additional Buddy's Home Furnishings locations before the end of our 2018 fiscal year.

SearsHometown.com sales were up 158.0% compared to second quarter 2017.
Commercial sales increased 33.1% compared to second quarter 2017. Our margin on commercial sales increased 48.1% as the margin rate improved by 136 basis points compared to second quarter 2017. Stores participating in this program increased to nearly 55% of our stores from less than 40% last year.

In the second quarter we remodeled and converted 22 Hometown stores to our new Core Store format. We conducted the initial pilot of this format in 2017 in three stores and we were pleased with the results, which included positive comparable store sales and an improved gross margin rate. This expanded pilot will enable us to further assess this new format, which is designed to build on the success of our America's Appliance Experts® program through focus on the non-appliance categories in the stores.

As previously disclosed, we recorded a $7.6 million charge in the second quarter associated with commencing the closure of 109 under-performing Hometown stores, which includes $0.8 million of closed-store impairment charges. As of August 4, 2018, the closure of 98 of these stores was complete, and the remaining eleven stores are expected to be closed in the third quarter. We expect these closings to advance our efforts to improve the profitability of our Hometown segment and strengthen our balance sheet. We had inventory investments in these stores of $31.5 million as of the end of the first quarter 2018 and are using proceeds from the liquidation of this inventory to pay down borrowings under our Amended and Restated Credit Agreement (the "Senior ABL Facility").
Second Quarter Performance Highlights
Consolidated comparable store sales were 0.9% in the second quarter of 2018. This represented a significant improvement from comparable store sales of (10.5)% in the first quarter of 2018 and is the first time since the second quarter of 2013 that we have reported positive consolidated comparable sales. Furthermore, this positive trend continued with positive consolidated comparable sales in August.
Hometown segment comparable store sales increased 2.2% in the second quarter of 2018. Lawn and garden outperformed the comparable store sales average due to strong performance in the month of May resulting from favorable weather conditions. Lawn and garden contributed approximately 50% of Hometown's total comparable store sales dollar increase. Appliances also had positive comparable store sales. Although inventory availability has remained challenging, tools did generate positive comparable store sales for the quarter.
Outlet segment comparable store sales declined 2.3% in the second quarter of 2018. This decline was driven by the continuation of our as-is appliance pricing strategy in Outlet that we launched late in the second quarter of 2017. The positive gross margin benefit achieved from continuing this new pricing strategy significantly outweighed the sales decline. It is important to note that Outlet achieved positive comparable sales in July 2018, the first month in which the current pricing strategy was comparable to the prior year. In addition, positive comparable store sales continued in August.
Consolidated gross margin was $92.0 million, or 21.3% of net sales, in the second quarter of 2018 compared to $92.3 million, or 18.8% of net sales, in the second quarter of 2017. The gross margin rate improvement of 250 basis points mostly offset the volume-related decrease in gross margin. Closing store costs negatively impacted gross margin by 147 basis points and 228 basis points in the second quarters of 2018 and 2017, respectively.
Hometown gross margin decreased $10.9 million, or 16.2%, to $56.6 million in the second quarter of 2018. Hometown gross margin rate decreased by 70 basis points to 18.7%. The decline was driven by accelerated closing store costs. Closing store costs negatively impacted gross margin by 218 basis points and 119 basis points in the second quarters of 2018 and 2017, respectively.
Outlet gross margin increased $10.5 million, or 42.3%, to $35.3 million in the second quarter of 2018. Outlet gross margin rate improved by 1,030 basis points to 27.7% driven by higher margins on merchandise sales and lower store closing costs partially offset by an increase in occupancy costs as a percent of sales due to the sales decline and an increase in the number of Company-operated stores. Closing store costs (credits) impacted gross margin by (21) basis points and 495 basis points in the second quarters of 2018 and 2017, respectively.
Consolidated selling and administrative expenses decreased 18.4% to $94.0 million, or 21.8% of net sales, in the second quarter of 2018 from $115.2 million, or 23.5% of net sales, in the comparable quarter last year. The decrease was primarily due to (1) lower commissions paid to dealers and franchisees on lower sales volume, (2) $5.6 million of provisions related to franchisee notes receivable in the second quarter of 2017 (of which provisions there were none in the second quarter of 2018), (3) lower expenses from stores closed (net of new store openings) since the second quarter of 2017, (4) lower IT transformation investments, and (5) lower marketing expense. The reductions were partially offset by higher payroll and benefits due to a higher proportion of Company-operated stores. IT transformation investments were $6.5 million, or 1.5% of sales, in the second quarter of 2018 compared to $8.5 million, or 1.7% of sales, in the second quarter of 2017.
We recorded operating losses of $5.8 million and $27.6 million in the second quarters of 2018 and 2017, respectively. The decrease in operating loss was due to lower selling and administrative expenses, a higher gross margin rate and positive comparable store sales, partially offset by lower volume from closed stores.
We recorded a net loss of $9.3 million for the second quarter of 2018 compared to a net loss of $29.4 million for the prior-year comparable quarter. The decrease in our net loss was primarily attributable to the factors discussed above, partially offset by higher interest expense.
Consolidated adjusted EBITDA improved $8.5 million to $11.3 million in the second quarter of 2018 from $2.8 million in the second quarter of 2017.
Hometown adjusted EBITDA decreased $1.5 million to $0.2 million in the second quarter of 2018 from $1.8 million in the second quarter of 2017. The decrease was driven by lower volume related to closed stores and a lower gross margin rate partially offset by lower selling and administrative expenses and positive comparable store sales.
Outlet adjusted EBITDA increased $10.0 million in the second quarter of 2018 to $11.0 million from $1.0 million in the second quarter of 2017. The improvement was driven by an improved gross margin rate and lower selling and administrative expenses partially offset by lower sales.
IT Transformation and Operational Independence
During the second quarter, we made significant progress toward the full-scale migration and implementation of our new IT systems. At the end of the quarter, system architecture and coding were substantially complete, and we had put into production a large portion of the system functionality. We also expanded our direct-sourcing capabilities and completed several additional direct-sourcing and merchandise supply agreements with key merchandise suppliers. These strategic sourcing relationships further enhance our operational independence from Sears Holdings Corporation ("Sears Holdings") and position us to achieve improved inventory availability which will enable us to optimize merchandise revenues. Selling and administrative expenses included $6.5 million of IT transformation investments in the second quarter of 2018 compared to $8.5 million in the second quarter of 2017. We are completing the final elements of user-acceptance testing, user-training and site readiness as we prepare for our initial store deployment and full-scale pilot of our enterprise-resource and point-of-sale systems. We expect to complete full-scale migration and implementation of our new IT systems by the end of our 2018 fiscal year and, if we do so, we do not expect additional significant IT transformation investments after the end of our 2018 fiscal year.
Financial Position
We had cash and cash equivalents of $13.8 million as of August 4, 2018 and $18.3 million as of July 29, 2017. Unused borrowing capacity as of August 4, 2018 under the Senior ABL Facility was $44.7 million with $96.3 million drawn and $7.2 million of letters of credit outstanding. On February 16, 2018, the Company entered into a $40 million Term Loan Credit Agreement with Gordon Brothers Finance Company (the "Term Loan Agreement"). The Term Loan Agreement is secured by a second lien security interest (subordinate only to the liens securing the Senior ABL Facility) on substantially all the assets of the Company and its subsidiaries (the same assets as the assets securing the Senior ABL Facility). The proceeds of the $40 million loan under the Term Loan Agreement were used primarily to reduce borrowings under the Senior ABL Facility. For the second quarter of 2018, we funded ongoing operations with cash provided by operating activities. Our primary needs for liquidity are to fund inventory purchases, IT transformation investments, capital expenditures, and other general corporate needs.
In the second quarter of 2018, we continued our agreement with Sears Holdings whereby SHO paid Sears Holdings' invoices for merchandise and services on accelerated terms in exchange for cash discounts. The discounts we received for the accelerated payments, less incremental interest expense, resulted in a net financial benefit to the Company. The Senior ABL Facility borrowings increased by $15.0 million as of August 4, 2018 as a result of the accelerated payments. We can, in our sole discretion, revert to ten-day, no-discount payment terms at any time.
Total merchandise inventories were $306.7 million at August 4, 2018 compared to $356.9 million at July 29, 2017. Merchandise inventories declined $22.8 million and $27.4 million in Hometown and Outlet, respectively, from July 29, 2017. The decrease in Hometown was primarily due to store closures, in addition to efforts to reduce non-productive inventory. Outlet's decrease was primarily driven by store closures and new sourcing contracts that allow for improved flow of inventory of as-is appliances to match forecasted sales.
Comparable Store Sales
Comparable store sales include merchandise sales for all stores operating for a period of at least 12 full months, including remodeled and expanded stores but excluding store relocations and stores that have undergone format changes. Comparable store sales include online transactions fulfilled and recorded by SHO and give effect to the change in the unshipped sales reserves recorded at the end of each reporting period.
Adjusted EBITDA
In addition to our net loss determined in accordance with generally accepted accounting principles ("GAAP"), for purposes of evaluating operating performance we also use adjusted earnings before interest, taxes, depreciation and amortization, or "adjusted EBITDA," which excludes certain significant items as set forth and discussed below. Our management uses adjusted EBITDA, among other factors, for evaluating the operating performance of our business for comparable periods. Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items. Adjusted EBITDA should not be considered as a substitute for GAAP measurements.
While adjusted EBITDA is a non-GAAP measurement, we believe it is an important indicator of operating performance for investors because:
EBITDA excludes the effects of financing and investing activities by eliminating the effects of interest and depreciation and amortization costs; and
Other significant items, while periodically affecting our results, may vary significantly from period to period and may have a disproportionate effect in a given period, which affects comparability of results. These items may also include cash charges such as severance and IT transformation investments that make it difficult for investors to assess the Company's core operating performance.
The Company has undertaken an initiative on a limited number of occasions to accelerate the closing of under-performing stores in an effort to improve profitability and make the most productive use of capital. Under-performing stores are typically closed during the normal course of business at the termination of a lease or expiration of a franchise or dealer agreement and, as a result, do not have significant future lease, severance, or other non-recurring store-closing costs. When we close a significant number of stores or close them on an accelerated basis (closing prior to lease termination or expiration), the Company excludes the associated costs of the closings from adjusted EBITDA.
The following table presents a reconciliation of consolidated adjusted EBITDA to consolidated net loss, the most comparable GAAP measure, for each of the periods indicated:

13 Weeks Ended

26 Weeks Ended
Thousands
August 4, 2018

July 29, 2017

August 4, 2018

July 29, 2017
Net loss
$
(9,326)


$
(29,446)


$
(18,695)


$
(50,880)

Income tax expense
46


239


454


1,071

Other income
(156)


(231)


(256)


(550)

Interest expense
3,604


1,874


7,056


3,465

Operating loss
(5,832)


(27,564)


(11,441)


(46,894)

Depreciation and amortization
3,779


4,704


6,387


6,908

Provision for franchisee note losses, net of recoveries
(54)


5,585


(12)


5,701

IT transformation investments
6,498


8,463


12,241


17,718

Accelerated closure of under-performing stores
6,866


11,579


6,945


10,629

Adjusted EBITDA
$
11,257


$
2,767


$
14,120


$
(5,938)

The following table presents a reconciliation of our Hometown segment's adjusted EBITDA to operating loss, the most comparable GAAP measure for our Hometown segment, for each of the periods indicated:

13 Weeks Ended

26 Weeks Ended
Thousands
August 4, 2018

July 29, 2017

August 4, 2018

July 29, 2017
Operating loss
$
(13,121)


$
(10,135)


$
(24,479)


$
(18,067)

Depreciation and amortization
1,882


1,890


3,206


2,745

Provision for franchisee note losses, net of recoveries
(54)


49


(111)


(34)

IT transformation investments
4,500


5,625


8,476


11,779

Accelerated closure of under-performing stores
7,031


4,338


7,252


3,388

Adjusted EBITDA
$
238


$
1,767


$
(5,656)


$
(189)

The following table presents a reconciliation of our Outlet segment's adjusted EBITDA to operating income (loss), the most comparable GAAP measure for our Outlet segment, for each of the periods indicated:

13 Weeks Ended

26 Weeks Ended
Thousands
August 4, 2018

July 29, 2017

August 4, 2018

July 29, 2017
Operating income (loss)
$
7,289


$
(17,429)


$
13,038


$
(28,827)

Depreciation and amortization
1,897


2,814


3,181


4,163

Provision for franchisee note losses, net of recoveries



5,536


99


5,735

IT transformation investments
1,998


2,838


3,765


5,939

Accelerated closure of under-performing stores
(165)


7,241


(307)


7,241

Adjusted EBITDA
$
11,019


$
1,000


$
19,776


$
(5,749)

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING AND OTHER INFORMATION
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "forward looking statements"). Statements preceded or followed by, or that otherwise include, the words "believes," "expects," "anticipates," "intends," "project," "estimates," "plans," "forecast," "is likely to," and similar expressions or future or conditional verbs such as "will," "may," "would," "should," and "could" are generally forward-looking in nature and not historical facts. The forward-looking statements are subject to significant risks and uncertainties that may cause our actual results, performance, and achievements in the future to be materially different from the future results, future performance, and future achievements expressed or implied by the forward-looking statements. The forward-looking statements include, without limitation, information concerning our future financial performance, business strategies, plans, goals, beliefs, expectations, and objectives. The forward-looking statements are based upon the current beliefs and expectations of our management.
The following factors, among others, (1) could cause our actual results, performance, and achievements to differ materially from those expressed in the forward-looking statements, and one or more of the differences could have a material adverse effect on our ability to operate our business and (2) could have a material adverse effect on our results of operations, financial condition, liquidity, and cash flows: if Sears Holdings seeks the protection of the U.S. bankruptcy laws (including the effects of the imposition of the "automatic stay" and the effects if Sears Holdings were to seek to reject one or more of the SHO-Sears Holdings Agreements); our ability to offer merchandise and services that our customers want, including those under the KCD Marks; our Amended and Restated Merchandising Agreement with Sears Holdings provides that (1) if a third party that is not an affiliate of Sears Holdings acquires the rights to one or more (but less than all) of the KCD Marks Sears Holdings may terminate our rights to buy merchandise branded with any of the acquired KCD Marks and (2) if a third party that is not an affiliate of Sears Holdings acquires the rights to all of the KCD Marks Sears Holdings may terminate the Amended and Restated Merchandising Agreement in its entirety, over which events we have no control; the sale by Sears Holdings and its subsidiaries to other retailers that compete with us of major home appliances and other products branded with one of the KCD Marks; during 2016 Sears Holdings announced that it would explore alternatives for its Kenmore, Craftsman, and Diehard businesses and further expand the presence of these brands and that it was continuing to explore alternatives for these businesses by evaluating potential partnerships or other transactions; during 2017 Sears Holdings announced that it had completed its sale to Stanley Black & Decker, Inc. of Sears Holdings' Craftsman business, including the Craftsman brand name and related intellectual property rights; during 2017 Sears Holdings announced the launch of Kenmore and Diehard products on Amazon.com; the willingness and ability of Sears Holdings to fulfill its contractual obligations to us; our ability to successfully manage our inventory levels and implement initiatives to improve inventory management and other capabilities; competitive conditions in the retail industry; worldwide economic conditions and business uncertainty, the availability of consumer and commercial credit, changes in consumer confidence, tastes, preferences and spending, and changes in vendor relationships; the fact that our past performance generally, as reflected on our historical financial statements, may not be indicative of our future performance as a result of, among other things, the impact of increased costs due to a decrease in our purchasing power following the Separation and other losses of benefits associated with having been wholly owned by Sears Holdings and its subsidiaries prior to the Separation; our continuing reliance on Sears Holdings for most products and services that are important to the successful operation of our business, and our potential need to rely on Sears Holdings for some products and services beyond the expiration, or earlier termination by Sears Holdings, of our agreements with Sears Holdings; the willingness of Sears Holdings' appliance, lawn and garden, tools, and other vendors to continue to supply to Sears Holdings on terms (including vendor-payment terms for Sears Holdings' merchandise purchases) that are acceptable to it (which vendor-payment terms, we believe, are becoming, and in the future could continue to become, increasingly uneconomic for Sears Holdings) and to us, merchandise that we would need to purchase from Sears Holdings to ensure continuity of merchandise supplies for our businesses; the willingness of Sears Holdings' appliance, lawn and garden, tools, and other vendors to continue to pay to Sears Holdings merchandise-related subsidies and allowances and cash discounts (Sears Holdings is obligated to pay to a portion of these subsidies and allowances to us, and the amounts required to be paid to us declined significantly during the first two fiscal quarters of 2018); our ability to resolve, on commercially reasonable terms, future disputes with Sears Holdings regarding the material terms and conditions of our agreements with Sears Holdings; our ability to establish information, merchandising, logistics, and other systems separate from Sears Holdings that would be necessary to ensure continuity of merchandise supplies and services for our businesses if vendors were to reduce, or cease, their merchandise sales to Sears Holdings or provide logistics and other services to Sears Holdings or if Sears Holdings were to reduce, or cease, its merchandise sales to us or reduce providing, or cease to provide, logistics and other services to us; if Sears Holdings' sales of major appliances and lawn and garden merchandise to its retail customers decline Sears Holdings' sales to us of outlet-value merchandise could decline; our ability to maintain an effective and productive business relationship with Sears Holdings, particularly if future disputes were to arise with respect to the terms and conditions of our agreements with Sears Holdings; most of our agreements related to the Separation and our continuing relationship with Sears Holdings were negotiated while we were a subsidiary of Sears Holdings (except for amendments agreed to after the Separation), and we may have received different terms from unaffiliated third parties (including with respect to merchandise-vendor and service-provider indemnification and defense for negligence claims and claims arising out of failure to comply with contractual obligations); our reliance on Sears Holdings to provide computer systems to process transactions with our customers (including the point-of-sale system for the stores we operate and the stores that our independent dealers and independent franchisees operate, which point-of-sale system captures, among other things, credit-card information supplied by our customers) and others, quantify our results of operations, and manage our business ("SHO's SHC-Supplied Systems"); SHO's SHC-Supplied Systems could be subject to disruptions and data/security breaches (Sears Holdings announced on May 31, 2017 that its Kmart store payment-data systems had been infected with a malicious code and that the code had been removed and the event contained and on April 4, 2018 Sears Holdings announced that one of its vendors that provides online support services to Sears and Kmart had notified Sears Holdings that the vendor had experienced a security incident during 2017 that involved unauthorized access to credit card information with respect to less than 100,000 Sears Holdings' customers), and Sears Holdings could be unwilling or unable to indemnify and defend us against third-party claims and other losses resulting from such disruptions and data/security breaches, which could have one or more material adverse effects on SHO; our ability to implement our IT transformation by the end of our 2018 fiscal year in accordance with our plans, expectations, current timetable, and anticipated cost; limitations and restrictions in the Senior ABL Facility and the Term Loan Agreement and their related agreements governing our indebtedness and our ability to service our indebtedness; competitors could continue to reduce their promotional pricing on new-in-box appliances, which could continue to adversely impact our sales of out-of-box appliances and associated margin; our ability to generate profitable sales of merchandise and services on our transactional ecommerce websites in the amounts we have planned to generate; our ability to obtain additional financing on acceptable terms; our dependence on the ability and willingness of our independent dealers and independent franchisees to operate their stores profitably and in a manner consistent with our concepts and standards; our ability to significantly reduce or eliminate the Hometown segment's negative adjusted EBITDA via our efforts to close unproductive Hometown segment stores and reduce the inventory, marketing, promotion, supply chain, and other expenses associated with these stores; our ability to sell profitably online all of our merchandise and services; our dependence on sources outside the U.S. for significant amounts of our merchandise inventories; fixed-asset impairment for long-lived assets; our ability to attract, motivate, and retain key executives and other employees; our ability to maintain effective internal controls as a publicly held company; litigation and regulatory trends challenging various aspects of the franchisor-franchisee relationship could expand to challenge or adversely affect our relationships with our independent dealers and independent franchisees; low trading volume of our common stock due to limited liquidity or a lack of analyst coverage; and the impact on our common stock and our overall performance as a result of our principal stockholder's ability to exert control over us.
The foregoing factors should not be understood as exhaustive and should be read in conjunction with the other cautionary statements, including the "Risk Factors," that are included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2018 and in our other filings with the Securities and Exchange Commission and our other public announcements. While we believe that our forecasts and assumptions are reasonable, we caution that actual results may differ materially. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Consequently, actual events and results may vary significantly from those included in or contemplated or implied by our forward-looking statements. The forward-looking statements included in this news release are made only as of its date. We undertake no obligation to publicly update or review any forward-looking statement made by us or on our behalf, whether as a result of new information, future developments, subsequent events or circumstances, or otherwise, except as required by law.
About Sears Hometown and Outlet Stores, Inc.
Sears Hometown and Outlet Stores, Inc. is a national retailer primarily focused on selling appliances, hardware, tools and lawn and garden equipment. Our Hometown stores are designed to provide our customers with in-store and online access to a wide selection of national brands of 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, reconditioned, overstocked, and scratched and dented products across a broad assortment of merchandise categories, including appliances, lawn and garden equipment, apparel, mattresses, sporting goods and tools at prices that are significantly lower than list prices. As of August 4, 2018, we or our independent dealers and independent franchisees operated a total of 783 stores across 49 states as well as in Puerto Rico and Bermuda. Our principal executive offices are located at 5500 Trillium Boulevard, Suite 501, Hoffman Estates, Illinois 60192 and our telephone number is (847) 286-7000.

https://www.prnewswire.com/news-releases/sears-hometown-and-outlet-stores-inc-reports-second-quarter-2018-results-300708635.html
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Enterprising Investor Enterprising Investor 6 years ago
Up big in pre-market trading.
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Enterprising Investor Enterprising Investor 6 years ago
Sears Hometown and Outlet Stores posts preliminary Q2 results (8/30/18)
On September 7, 2018 before the market opens Sears Hometown and Outlet Stores, Inc. intends to file its 2018 earnings release for the 13-week period ended August 4, 2018 (“the second quarter of 2018”). The Company expects to report for the second quarter of 2018 positive comparable store sales for its Hometown segment as well as for the Company overall. The Company also expects to report for the second quarter of 2018 that (1) its net loss decreased by an amount in the range of $18.5 million to $20.5 million versus the comparable period in the prior fiscal year and (2) adjusted EBITDA increased by an amount in the range of $7.5 million to $8.7 million for the second quarter of 2018 versus the comparable period in the prior fiscal year, all of which increase was generated by the Company’s Outlet segment. The following table presents, with respect to the ranges, a reconciliation of the expected increase in adjusted EBITDA, a non-GAAP financial measure, to the expected decrease in net loss, the most comparable GAAP measure, for the second quarter of 2018:
https://www.sec.gov/Archives/edgar/data/1548309/000154830918000112/a8k-082918prexearningsrele.htm
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rising rising 6 years ago
I love it! SEARS HOMETOWN and OUTLET STORES is gonna FLY TO BLUE SKIES!!! SHOS!!!!
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Enterprising Investor Enterprising Investor 6 years ago
Don't Work For Sears. I Own This Place.

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Enterprising Investor Enterprising Investor 6 years ago
Marker (5/21/18)

SEARS HOMETOWN AND OUTLET STORES INC (SHOS)
Last Trade [tick] 2.5500 [-]
Volume 456,553
Net Change 0.3500
Net Change % 15.91%
52 Week High 3.9500 on 04/16/2018
52 Week Low 1.3750 on 12/08/2017
Day High 2.6672
Day Low 2.1500
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Enterprising Investor Enterprising Investor 6 years ago
Sears Hometown And Outlet: The Slow Demise Of Sears Begins To Benefit Sears Hometown (5/21/18)

https://seekingalpha.com/article/4175916-sears-hometown-outlet-slow-demise-sears-begins-benefit-sears-hometown
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Enterprising Investor Enterprising Investor 6 years ago
Investor Presentation (5/18/18)

https://www.sec.gov/Archives/edgar/data/1548309/000154830918000083/a51818shopresentation.htm
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Enterprising Investor Enterprising Investor 6 years ago
New Sears Hometown Store Opens in Pleasantville (4/25/18)

Local Retailer Offers Top Brand Home Appliances, Lawn and Garden Equipment, Tools, Mattresses and More at Guaranteed Lowest Price

PLEASANTVILLE, Pa., April 25, 2018 (GLOBE NEWSWIRE) -- Sears Hometown and Outlet Stores, Inc. (NASDAQ:SHOS) will open its newest PennsylvaniaSears Hometown Store on April 26 at 123 East State Street, located inside Andrews Hilltop Hardware.

The Pleasantville location marks the 14th opening of a new Sears Hometown Store this year and the 14th opening of a new store across all of Sears Hometown and Outlet Stores formats. Unlike most retail concepts, Sears Hometown Stores combine the value, selection and services associated with larger retail stores but are owned and operated by a member of the local community.

"We're excited to serve the Pleasantville community and surrounding areas with competitively-priced, top-of-the-line products," said Brenden Riley, owner of the Sears Hometown Store in Pleasantville. "With the buying power of a large department store and the distinctive atmosphere of an independently-owned retailer, we're able to offer our customers a selection of home appliances, electronics and lawn and garden equipment with the help of a knowledgeable sales team."

This unique store format allows customers in small communities to have access to the great products and brands usually found only in Sears stores. For instance, the new Sears Hometown Store within a store in Pleasantville is the only place in town where customers can find an incredible selection of the top appliance brands such as Kenmore®, Maytag®, KitchenAid®, Whirlpool®, Bosch®, Frigidaire® and GE®, plus a large assortment of lawn and garden equipment, Craftsman® tools, fitness equipment, electronics, mattresses and more.

The Pleasantville team is excited to provide customers with professional advice, exceptional service and real-time price checks to make sure they receive the guaranteed lowest price. For instance, if a product is not available in-stores, Sears Hometown Store associates can order customers any product from the entire merchandise selection offered by Sears, including apparel, footwear, jewelry and much more. Customers also have the option to order products online and pick them up in the store without a shipping charge. The Pleasantville store also offers Sears Nationwide Service, Parts and Installation.

The Sears Hometown Store in Pleasantville can be reached at 814-589-7631 and is open Monday through Friday from 9:00 a.m. to 7:00 p.m. and Saturday and Sunday from 9:00 a.m. to 4:00 p.m. To learn more about Sears Hometown Stores, visit www.searshometownstores.com.

About Sears Hometown and Outlet Stores, Inc.

Sears Hometown and Outlet Stores, Inc. (NASDAQ:SHOS) is an independent national retailer, with a license to use the Sears brand name, primarily focused on selling home appliances, lawn and garden equipment, tools and hardware. As of April 29, 2017, Sears Hometown and Outlet Stores, Inc. and its dealers and franchisees operated 1,012 stores across all 50 states as well as in Puerto Rico and Bermuda. In addition to merchandise, Sears Hometown and Outlet Stores, Inc. provide consumers with access to a full suite of services, including home delivery, installation and extended service contracts.
Operating through two segments—the Sears Hometown and Hardware segment and the Sears Outlet segment—Sears Hometown and Outlet Stores, Inc. and its subsidiaries offer franchise and dealership opportunities focused on selling, as applicable, top brand home appliances, hardware, tools, lawn and garden equipment and outlet merchandise. For more information about Sears Hometown & Outlet Stores, Inc., visit www.shos.com. To learn about the opportunity to own and operate a store format, visit www.ownasearsstore.com.

https://www.nasdaq.com/press-release/new-sears-hometown-store-opens-in-pleasantville-20180425-00997
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Enterprising Investor Enterprising Investor 6 years ago
Powell purchase price corrected to $1.899 (4/23/18)

https://www.sec.gov/Archives/edgar/data/1548309/000154830918000070/xslF345X03/wf-form4a_152451924691433.xml
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Enterprising Investor Enterprising Investor 6 years ago
Insiders bought shares on 4/20/18.

President and CEO William Powell bought 2,000 at $2.899 (potential typo), SVP and CEO E.J. Bird picked up 5,000 shares at $1.91 and Director Richard Longino added 15,000 at $1.85.

https://www.sec.gov/Archives/edgar/data/1548309/000154830918000068/xslF345X03/wf-form4_152451459563892.xml

https://www.sec.gov/Archives/edgar/data/1548309/000154830918000066/xslF345X03/wf-form4_152451440631460.xml

https://www.sec.gov/Archives/edgar/data/1548309/000154830918000067/xslF345X03/wf-form4_152451447689363.xml
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rising rising 6 years ago
Strong as Bull - it will pull Right back up - NO WORRIES - They are making HUGE changes and are like a teenager leaving the nest! GO SHOS!
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Enterprising Investor Enterprising Investor 6 years ago
Sears Hometown and Outlet Stores, Inc. Reports Fourth Quarter And Fiscal Year 2017 Results And Announces Annual Meeting Date (4/19/18)

HOFFMAN ESTATES, Ill., April 19, 2018 /PRNewswire/ -- Sears Hometown and Outlet Stores, Inc. ("SHO," "our," "we," or the "Company") (NASDAQ: SHOS) today reported results for its fiscal year and quarter ended February 3, 2018.

Overview of Results

Results for the fourth fiscal quarter of 2017 compared to the fourth fiscal quarter of 2016 included:

Net loss decreased $12.6 million to $33.2 million from $45.8 million

Loss per share decreased $0.56 to $1.46 loss per share from $2.02 loss per share

Comparable store sales decreased 12.4%

Adjusted EBITDA decreased $3.4 million to $12.4 million loss from $9.0 million loss

Results for the 2017 fiscal year compared to the 2016 fiscal year included:

Net loss decreased $36.8 million to $95.1 million from $131.9 million

Loss per share decreased $1.62 to $4.19 loss per share from $5.81 loss per share

Comparable store sales decreased 8.4%

Adjusted EBITDA increased $4.0 million to $14.5 million loss from $18.5 million loss

Our Annual Report on Form 10-K for our fiscal year ended February 3, 2018, which we have filed with the U.S Securities and Exchange Commission today, includes, among other financial statements, our Consolidated Statement of Operations for our fiscal year ended February 3, 2018, our Consolidated Balance Sheet at February 3, 2018, our Consolidated Statement of Stockholders' Equity for our fiscal year ended February 3, 2018, the Notes to the Consolidated Financial Statements, and the Report of Independent Registered Public Accounting Firm.

Our fiscal years end on the Saturday nearest to the last day of January. The fourth quarter and fiscal year 2017 included an extra week (the "53rd week") compared to our 2016 fiscal year. The 53rd week is not included in comparable store sales calculations.

Will Powell, Chief Executive Officer and President, said, "Our overall sales and adjusted EBITDA performance in the fourth quarter were significantly below our expectations, particularly in light of the improved adjusted EBITDA results we achieved in the second and third quarters of 2017. We view several of the operating challenges we experienced in the fourth quarter as predominantly short-term, particularly merchandise availability issues and reduced year-over-year television advertising of key brands, and believe that they should not have the same pronounced impact on the business during the first quarter of 2018. Through the first two months of our 2018 first fiscal quarter (the nine weeks ended April 7, 2018), we have seen business results improve and estimate performance for the nine-week period to include improvements in year-over-year adjusted EBITDA in a range of $6.0 to $6.5 million. We cannot predict whether business results will continue to improve in fiscal April 2018 or whether for the month adjusted EBITDA will be the same, better, or worse than fiscal April 2017 adjusted EBITDA.

"In the quarter, we continued to make measurable progress on our strategic initiatives that are strengthening the Company's long-term outlook and should improve profitability. These include growing our lease-to-own sales, expanding our on-line capabilities, developing our Commercial Sales business, expanding our direct sourcing agreements with vendors, optimizing our store portfolio, and completing our IT systems transformation project (which we expect will enhance our business capabilities and reduce our reliance on Sears Holdings Corporation for merchandise and services)."

Segment Performance Highlights

Hometown segment comparable store sales for the quarter declined 10.5%. We believe the Hometown sales performance was adversely impacted by a significant decline in year-over-year television advertising during the holiday season featuring the SEARS®, KENMORE®, and CRAFTSMAN® brands, which reduced consumer awareness and draw. To offset this decline in television and other forms of advertising for these brands, we have launched a fully-integrated print, digital and television marketing campaign in March 2018 to highlight the unique position of the Hometown Stores and our strengths in the home appliances category. This includes the Company's first ever national television commercials.

The home appliances category performed significantly better in the fourth quarter of 2017 than the comparable store sales average for the Hometown segment and better than the year-to-date home appliances comparable store sales average performance through the first three quarters of 2017. The home appliances gross profit rate in the fourth quarter was negatively impacted by increased promotional depth and duration, particularly during the holiday-season promotional events in November and December.

Other contributors to the comparable store sales decline for the quarter included the tools and lawn & garden categories. The tools category was significantly impacted by merchandise availability in the quarter in key Craftsman tool lines such as mechanics tool sets, portable power tools, and tool storage. We expect these merchandise-availability issues to continue for a significant part of the first quarter of 2018, but we expect gradual recovery as we move some tool sourcing to direct purchase arrangements with vendors of alternative national brands and through the actions our supplier of Craftsman tools has taken to improve availability. Of note, the tools business historically has a lower overall portion of total Hometown sales in the first quarter compared to the fourth quarter due to the holiday season. Therefore, the impact of this availability issue should be less significant during the first quarter of 2018.

The lawn & garden comparable store sales decline was primarily driven by lack of snow removal sales, which were impacted by year-over-year weather changes in our key snow-related sales markets. In the fourth quarter of 2017 the snow removal line represented 79% of the comparable store sales decline in the lawn & garden category.

The Outlet segment's comparable store sales declined 16.3% for the fourth quarter of 2017. This decline was driven by our decision to not repeat last year's unproductive home appliances promotions, as well as the continuation of the new as-is appliance pricing strategy in Outlet we launched for this business late in the second quarter of 2017. The significant declines in comparable store sales in the Outlet appliance business were more than offset by a 12% increase in the average appliance ticket and better product costing. As a result, gross margin rates and segment profitability improved significantly, consistent with trends seen in the second and third quarters.

The Outlet segment had positive comparable store sales performance in furniture, mattresses, floorcare, and sporting goods. We continue to be encouraged by the sales growth from our new Ashley Furniture program and believe this category has significant long-term growth potential for the business.

Progress on Initiatives

Lease-to-Own/Rent-to Own: The Lease-to-Own business continued its rapid growth trajectory. Year-over-year leasing comparable store sales grew 89% in the fourth quarter of 2017 and were up 106% in fiscal 2017. Our leasing share of the total business more than doubled versus the prior year, growing to 6.6% share in the fourth quarter. Additionally, third-party commissions we received on leasing sales continued to be a meaningful contributor to our margin improvement.

On-line Capabilities: Sales through our Hometown segment websites grew rapidly in the fourth quarter, driven by higher traffic on the websites and amended agreements negotiated with Sears Holdings. The fourth quarter of 2017 was the first quarter we had a fully comparable quarterly year-over-year result for the Hometown sites. Our Hometown websites launched in November 2016 after amended agreements with Sears Holdings in May 2016 granted us contractual rights to do so. Hometown on-line sales for the fourth quarter of 2017 were up 290% compared to the fourth quarter of 2016. As a percentage of our total sales, the Hometown websites grew 58% in the fourth quarter compared to the third quarter of 2017, highlighting the progress we are making in improving the customer experience on-line through ease of use enhancements and compelling promotional offers. We expect Hometown on-line sales will become an increasingly more meaningful contributor to our business in 2018, as in December 2017 we completed a significant expansion of the zip codes we are able to service through our Hometown websites based on an amended agreement we negotiated with Sears Holdings.

Commercial Sales: We continued to make progress on the development of our commercial sales program, leveraging our ability to provide customized solutions for commercial customers in rural markets which we believe are under-served by competitors. Commercial sales grew 45.4% in the fourth quarter of 2017 compared to the fourth quarter of 2016. For the full year 2017, commercial sales grew 22.9%. More impressively, commercial sales margins, net of commissions paid, increased 52.1% for the full year 2017 as a result of a more disciplined commercial pricing process. Dealer and franchisee adoption of the program also continued to grow, with 52% of stores participating in 2017 versus 42% in 2016.

Merchandise Sourcing Strategic Relationships: We continued to leverage new systems functionality, enabled by our investments in the IT systems transformation initiative, to enhance our merchandise sourcing and inventory management capabilities. As previously stated, we have established direct purchasing relationships with several of our key strategic product manufacturers which hold significant market share in the product categories we compete in across the industry. In the fourth quarter of 2017, we continued to expand on our direct sourcing capability and increased the flow of direct sourced product through our logistics network for fulfillment of customer orders and replenishment of store stock. In addition to prior supply agreements that we have noted, we entered into a direct-purchase agreement with Stanley Black & Decker and continued efforts to secure additional direct-purchase agreements with other key merchandise and non-merchandise vendors. We also took steps toward launching a new special order process that will give our customers access to an expanded assortment of products from leading brands in the home appliances category.

Store Portfolio: In fiscal 2017 we closed 127 stores that in aggregate had significant negative EBITDA and were consuming over $35 million of inventory working capital. As part of our store portfolio optimization plan, we negotiated $7.2 million of early lease terminations for 26 previously closed properties in fiscal 2017, which reduced our balance sheet liability for the leases by $13.3 million, as well as eliminated expense obligations for utilities, taxes, maintenance, and related items through the original lease termination date.

IT Infrastructure and Operational Separation: Through the end of the fourth quarter of 2017, we completed a large portion of our IT transformation initiative and put into production new capabilities such as Hometown transactional websites, human resources management, payroll and owner commissions management, accounts payable, accounts receivable, and merchandise procurement and fulfillment. At the end of fiscal 2017, software development related to the remaining Enterprise Resource Planning and Point of Sale components was substantially complete. Testing of the remaining systems functionality, which has not been put into production, is well under way. In the first quarter of 2018, we expect to complete our testing efforts and finalize our plan to deploy a small-scale pilot of all systems across a limited number of store locations. We expect to finalize our plans for full system implementation across the enterprise after we assess the learnings and issues experienced during our pilot phase.

Fourth Quarter Results

Net sales in the fourth quarter of 2017 decreased $93.1 million, or 19.0%, to $395.8 million from the fourth quarter of 2016. This decrease was driven primarily by the impact of closed stores (net of new store openings) and a 12.4% decrease in comparable store sales. This decline was partially offset by sales of $23.4 million in the 53rd week.

Gross margin was $75.8 million, or 19.1% of net sales, in the fourth quarter of 2017 compared to $82.4 million, or 16.9% of net sales, in the fourth quarter of 2016. Hometown and Outlet gross margins increased by 210 and 290 basis points, respectively, in the fourth quarter of 2017 compared to the fourth quarter of 2016. The increase in gross margin rate was primarily due to a reduction in accelerated closing stores costs ($1.5 million in the fourth quarter of 2017 compared to $14.6 million in the fourth quarter of 2016) and higher margins on merchandise sales. These increases were partially offset by higher occupancy costs as a percentage of sales resulting from a greater mix of Company operated stores compared to the fourth quarter of 2016. The total impact of accelerated store closing costs and occupancy costs reduced gross margin rate 487 basis points in the fourth quarter of 2017 compared to a reduction of 684 basis points in the fourth quarter of 2016.

Selling and administrative expenses decreased to $100.4 million, or 25.4% of net sales, in the fourth quarter of 2017 from $112.8 million, or 23.1% of net sales, in the prior-year comparable quarter. The decrease was primarily due to: (1) lower commissions paid to dealers and franchisees on lower sales volume and lower store count, (2) lower expenses due to stores closed (net of new store openings), (3) lower marketing costs, (4) lower support costs paid to Sears Holdings, and (5) lower payroll and benefits expense. These decreases were partially offset by expenses of $4.0 million associated with the 53rd week, higher IT Transformation expense ($8.9 million in the fourth quarter of 2017 compared to $6.0 million in the fourth quarter of 2016), and $1.7 million of higher provisions in the fourth quarter of 2017 related to franchisee notes receivables. IT transformation expenses and provisions related to franchisee notes receivables increased selling and administrative expenses as a percent of sales by 262 basis points in the fourth quarter of 2017 compared to an increase of 119 basis points in the fourth quarter of 2016.

We recorded operating losses of $31.1 million and $43.5 million in the fourth quarters of 2017 and 2016, respectively. The reduction in operating loss was primarily due to lower store closing charges, a decrease in selling and administrative expenses, lower impairment charges ($3.4 million in the fourth quarter of 2017 compared to $9.4 million in the fourth quarter of 2016), and a $2.3 million favorable impact from the 53rd week partially offset by lower volume.

Fourth Quarter Net Loss

We recorded a net loss of $33.2 million for the fourth quarter of 2017 compared to a net loss of $45.8 million for the prior-year comparable quarter. The decrease in net loss was primarily attributable to a lower operating loss. Income tax benefit was $0.1 million, or 0.4%, in the fourth quarter of 2017, compared to expense of $0.8 million, or (1.9)% in the fourth quarter of 2016.

Full Year Results

Net sales for the 2017 fiscal year decreased $350.1 million, or 16.9%, to $1.7 billion from $2.1 billion in the 2016 fiscal year. This decrease was driven primarily by the impact of closed stores (net of new store openings) and an 8.4% decrease in comparable store sales partially offset by the impact of sales in the 53rd week of 2017.
Comparable store sales were down 8.1% and 9.1% in Hometown and Outlet, respectively. The home appliances and lawn & garden categories both outperformed the average comparable store sales while tools underperformed to the average.

Gross margin was $348.5 million, or 20.3% of net sales, for the full year 2017 compared to $408.7 million, or 19.7% of net sales, for the full year 2016. The increase in gross margin rate was primarily driven by higher margin on merchandise sales and lower shrink partially offset by higher occupancy costs as a percentage of sales resulting from a greater mix of Company operated stores compared to the prior year. Accelerated closing stores costs were $14.2 million for the full year 2017 compared to $16.1 million for the full year 2016. The total impact of occupancy costs, accelerated closing store costs, and shrink reduced gross margin rate 496 basis points for the full year 2017 compared to a 490 basis-point reduction for the full year 2016.
Selling and administrative expenses decreased to $419.6 million, or 24.4% of net sales, for the full year 2017 from $458.8 million, or 22.2% of net sales, for the full year 2016. The decrease was primarily due to: (1) lower expenses being recorded for stores closed (net of new store openings), (2) lower commissions paid to dealers and franchisees on lower sales volume and lower store count, (3) lower marketing costs, and (4) lower support costs paid to Sears Holdings. These decreases were partially offset by (1) higher IT Transformation costs ($34.4 million for the full year 2017 compared to $15.0 million for the full year 2016), (2) expenses associated with the 53rd week, (3) $8.1 million higher provisions for the full year 2017 related to franchisee notes receivables, and (4) higher payroll and benefits due to a higher mix of Company-operated stores. On a rate-to-sales basis, IT transformation costs and provisions for franchisee note receivables increased selling and administrative expenses 243 basis points for 2017 compared to 69 basis points for 2016.

During the second quarter of 2016, we completed the sale of an owned property located in San Leandro, California. Net proceeds from the sale were $26.1 million, and we recorded a gain on the sale of $25.3 million. We did not sell any owned property in fiscal 2017.

We recorded operating losses of $87.4 million and $47.7 million for the full years 2017 and 2016, respectively. The increase in operating loss was primarily due to the $25.3 million gain on sale of assets in 2016 and lower volume. These factors were partially offset by lower selling and administrative expense, a higher gross margin rate, lower impairment charges, and a $2.3 million favorable impact from the 53rd week.

Full Year Net Loss

We recorded a net loss of $95.1 million for the full year 2017 compared to a net loss of $131.9 million for the full year 2016. The decrease in our net loss was primarily attributable to a decrease in income tax expense partially offset by a higher operating loss and higher interest expense. Income tax expense was $0.5 million for the full year 2017 compared to $81.5 million for the full year 2016, comprised primarily of $100.1 million non-cash valuation allowance on our deferred tax assets recorded in 2016.

Financial Position

We had cash and cash equivalents of $10.4 million as of February 3, 2018 and $14.1 million as of January 28, 2017. Unused borrowing capacity as of February 3, 2018 under our Amended and Restated Credit Agreement, dated November 1, 2016, with Bank of America, N.A., as agent, and the lenders party thereto (the "Senior ABL Facility") was $24.9 million with $137.9 million drawn and $7.2 million of letters of credit outstanding. For the full year 2017 we funded ongoing operations with cash provided by financing activities. Our primary needs for liquidity are to fund inventory purchases, our IT transformation, capital expenditures and for general corporate purposes.

On February 16, 2018, the Company entered into a $40 million Term Loan Credit Agreement with Gordon Brothers Finance Company (the "Term Loan Agreement"). The Term Loan Agreement is secured by a second lien security interest (subordinate only to the liens securing the Senior ABL Facility) on substantially all the assets of the Company and its subsidiaries (the same assets as the assets specified with respect to the Senior ABL Facility). The Term Loan Agreement will mature on the earliest of (1) the maturity date specified in the Senior ABL Facility, (2) February 16, 2023, and (3) acceleration of the maturity date following an event of default in accordance with the Term Loan Agreement. The interest rate applicable to the $40 million loan under the Term Loan Agreement is a fluctuating rate of interest (payable monthly) equal to the greater of (1) three-month LIBOR plus 8.5% per annum and (2) a minimum interest rate of 9.5% per annum. The proceeds of the $40 million loan under the Term Loan Agreement were used primarily to reduce borrowings under the Senior ABL Facility.

Total merchandise inventories were $336.3 million at February 3, 2018 and $373.8 million at January 29, 2017. Merchandise inventories declined $13.9 million and $23.6 million in Hometown and Outlet, respectively, primarily due to store closures.

Comparable Store Sales

Comparable store sales include applicable merchandise sales for all stores operating for a period of at least 12 full months, including remodeled and expanded stores but excluding store relocations and stores that have undergone format changes. Comparable store sales include online transactions fulfilled and recorded by SHO and give effect to the change in the unshipped sales reserves recorded at the end of each reporting period.

Adjusted EBITDA

In addition to our net loss determined in accordance with generally accepted accounting principles ("GAAP"), for purposes of evaluating operating performance we also use adjusted earnings before interest, taxes, depreciation and amortization, or "adjusted EBITDA," which excludes certain significant items as set forth and discussed below. Our management uses adjusted EBITDA, among other factors, for evaluating the operating performance of our business for comparable periods. Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items. Adjusted EBITDA should not be considered as a substitute for GAAP measurements.

While adjusted EBITDA is a non-GAAP measurement, we believe it is an important indicator of operating performance for investors because:

EBITDA excludes the effects of financing and investing activities by eliminating the effects of interest and depreciation costs; and

Other significant items, while periodically affecting our results, may vary significantly from period to period and may have a disproportionate effect in a given period, which affects comparability of results. These items may also include cash charges such as severance and executive transition costs and IT transformation investments that make it difficult for investors to assess the Company's core operating performance.

Since the second quarter of 2015 the Company has excluded initial franchise revenues and provisions for franchise note losses, net of recoveries from adjusted EBITDA. This change is based on (1) the Company's decision to suspend its franchising of additional stores except to existing Company franchisees and (2) to better align adjusted EBITDA for purposes of incentive compensation.

The Company has undertaken an initiative on a limited number of occasions to accelerate the closing of under-performing locations in an effort to improve profitability and make the most productive use of capital. Under-performing locations are typically closed during the normal course of business at the termination of a lease or the expiration of a franchise or dealer agreement and, as a result, do not have significant future lease, severance, or other non-recurring store-closing costs. When we conduct a significant number of store closings or we close stores prior to lease termination or expiration (together, "accelerated store closings"), the Company excludes the associated costs of the accelerated store closings from adjusted EBITDA. In the fourth quarter and full year 2017, we excluded $1.5 million and $14.4 million of costs associated with accelerated store closings, respectively.

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About Sears Hometown and Outlet Stores, Inc.

Sears Hometown and Outlet Stores, Inc. is a national retailer primarily focused on selling home appliances, hardware, tools and lawn and garden equipment. Our Hometown stores (which includes our Hometown Stores, our Hardware Stores, and our Home Appliance Showrooms) 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. More than 90% of our Hometown Stores are operated by independent local dealers or franchisees. 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, 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 list prices. As of February 3, 2018, we or our independent dealers and independent franchisees operated a total of 900 stores across all 50 states as well as in Puerto Rico and Bermuda. Our principal executive offices are located at 5500 Trillium Boulevard, Suite 501, Hoffman Estates, Illinois 60192 and our telephone number is (847) 286-7000.

https://www.prnewswire.com/news-releases/sears-hometown-and-outlet-stores-inc-reports-fourth-quarter-and-fiscal-year-2017-results-and-announces-annual-meeting-date-300632566.html
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rising rising 6 years ago
All in time
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rising rising 6 years ago
yeppers get out let her drop than get back in - IT will get back up!
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willlbone willlbone 6 years ago
Retest the lows.
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56Chevy 56Chevy 6 years ago
Marker:
Sears Hometown And O (SHOS)
$1.925 down -0.225 (-10.47%)
Volume: 295,175

*no position at this time...still sinking.

The products themselves are second to none but overcoming the Sears name and ownership associations with E. Lampert may be too steep a hill. ?? I truly wished that they would have marketed and launched these stores under an entirely different plan. Sears-Lite isn't working :(




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rising rising 6 years ago
It will be back up SHOS MARK MY POST!
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56Chevy 56Chevy 6 years ago
Order online and pick up in the store without a shipping charge. This plays well into the massive trend towards online shopping.

Marker:
Sears Hometown And O (SHOS)
$2.20 down -1.05 (-32.31%)
Volume: 747,275

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willlbone willlbone 6 years ago
The 10K shut this party down.
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rising rising 6 years ago
Looks as though the financials that came out speak to a company turning around for the better of its stakeholders DIP AND RIP BABY! SHOS!
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