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Sears Hometown and Outlet net sales up

Staff writer ▼ | December 6, 2013
Sears Hometown and Outlet Stores, Inc. reported results for its quarter ended November 2, 2013. Net sales increased $4.2 million, or 0.7%, to $561.1 million from Q3 2012.
Sears Hometown and Outlet Stores
Sears Hometown and Outlet StoresSears Hometown and Outlet Stores, Inc. reported results for its quarter ended November 2, 2013. Net sales increased $4.2 million, or 0.7%, to $561.1 million from Q3 2012.


This increase was driven primarily by higher initial franchise revenues (which were $7.8 million in the third quarter of 2013 compared to $1.5 million in the third quarter of 2012) and sales from new stores (net of closures). Partially offsetting these increases were a 2.0% decrease in comparable store sales and an unfavorable impact of the calendar shift due to the 53rd week in 2012.

The comparable store sales decrease of 2.0% was comprised of a 1.5% decrease in Hometown and a 3.4% decrease in Outlet. The 2.0% decrease was primarily driven by lower major appliance and apparel sales in Outlet, lower Hometown lawn and garden sales, lower tools-category sales in both segments, and lower consumer electronics sales following our planned exit from the this category in most Hometown stores. These decreases were partially offset by higher major appliances sales in Hometown.

Gross margin was $135.5 million, or 24.1% of net sales, in the third quarter of 2013 compared to $138.4 million, or 24.9% of net sales, in the third quarter of 2012.

Selling and administrative expenses decreased to $121.7 million, or 21.7% of net sales, in the third quarter of 2013 from $122.1 million, or 21.9% of net sales, in the prior year quarter. The decrease was primarily due to a reduction in payroll and benefits related to franchise conversions and $3.7 million in Outlet distribution-center costs that were separated from selling store costs and were reflected in selling and administrative expense in the third quarter of 2012 and reflected in gross margin in the third quarter of 2013.

The company recorded operating income of $13.2 million and $14.1 million in the third quarters of 2013 and 2012, respectively. The $0.9 million decrease in operating income was driven by a lower gross profit rate partially offset by higher net sales, lower selling and administrative expenses, and a $1.6 million gain on the sale of an Outlet store location.

Included in these impacts on year-over-year operating income was an estimated $5 million of higher operating costs in the third quarter of 2013 incurred as a result of operating as an independent public company since our separation from Sears Holdings Corporation in October 2012.


 

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