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Sales, margins hit Sears Hometown Q1 net income

BY Dan Berthiaume

Hoffman Estates, Ill. — Sears Hometown and Outlet Stores Inc. had a difficult first quarter of fiscal 2014, reporting a substantial decline in net income as well as drops in net sales and same-store sales. Net income declined 75% to $3.7 million from $15 million.

Lower net sales, lower gross margin rate, and higher selling and administrative expenses all contributed to the steep drop in net income. Net sales in the quarter decreased 1.9% to $589.9 million from $601.1 million in the first quarter of 2013. This decrease was driven primarily by a 6.2% decrease in same-store sales, which was partially caused by growing online sales. Lower initial franchise revenues and lower liquidation revenues on end-of-season markout apparel merchandise received from Sears Holdings also negatively impacted net sales.

Bruce Johnson, CEO and president of Sears Hometown and Outlet, also cited weather and promotions as factors affecting the retailer’s first quarter results.

"First quarter results were affected by three main factors: weather,” said Johnson. “For the second year in a row, lawn and garden sales were negatively impacted by an unseasonably cold spring in many of our trade areas that dampened sales in March and April, following a very cold February that reduced overall store traffic and sales; continued lower margins in Outlet due to insufficient quantities of higher-margin, ‘as-is’ appliances; and a heavily promotional appliance retail environment where appliance retailers layered free delivery on top of discounted pricing."

Repeat visits decreased 1% year-over-year but bounced back from a low in April. Euclid analysis indicates this rebound is another positive sign for sales. The best day of the month was Thursday, May 29, with outperformance across all metrics. The worst day of the month was Sunday, May 4, which saw significant underperformance in traffic. In addition, fewer than expected repeat shoppers were seen on this day.

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Study: Many consumers accept mobile location-sharing

BY Dan Berthiaume

Portland, Ore. — Between 60 and 80% of mobile device users commonly allow mobile location-sharing, with an average location opt-in rate of 62%. According to a study from mobile relationship management software provider Urban Airship, 51% of mobile device users also opt into push notifications.

Opting into both location and push notifications are necessary in order to receive messages based on beacon proximity, current location or location history.

“Customers’ successes using location-targeting and our aggregate data analysis show that assumptions around consumers being reluctant to share location are false and massively short-sell mobile’s unique opportunity,” said Scott Kveton, CEO and co-founder, Urban Airship. “Users obviously value apps’ location-based functionality to earn the opt-in, just as the best apps do with push notifications by explaining its value and using it in personally relevant ways.”

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Mattress Firm completes Mattress Liquidators purchase

BY Dan Berthiaume

Houston — Mattress Firm Holding Corp. has completed its acquisition of the mattress specialty retail assets and operations of Mattress Liquidators, Inc., which operates Mattress King retail stores in Colorado and BedMart retail stores in Arizona.

This acquisition will add approximately 75 specialty retail stores to the Mattress Firm company-operated store base in markets where the company currently operates, primarily Denver, Colorado, Phoenix, Arizona and Tucson, Arizona, for an aggregate purchase price of approximately $35 million, subject to customary purchase price adjustments. The purchase price was funded by cash reserves and revolver borrowings, as well as a $3.5 million seller note that is payable in quarterly installments over two years.

Mattress Firm expects to rebrand and transition Mattress King and BedMart stores into Mattress Firm stores and has begun the process of outfitting the newly acquired stores with Mattress Firm’s merchandising approach, product offerings, point of sale systems and sales programs.

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