Sears Hometown reports preliminary Q4 net income drop
Hoffman Estates, Ill. – Sears Hometown and Outlet Stores Inc. reported preliminary declines in net income, net sales and same-store sales for the fourth quarter of fiscal 2013. Compared to the same quarter a year earlier, Sears Hometown reported net income of $3.72 million, down 61% from $9.66 million.
Preliminary net sales for the quarter decreased 4.5% to $602.5 million from $631.2 million. Preliminary same-store sales dropped 3.4%. Sears Hometown cited the extra week in the fourth quarter of fiscal 2012, as well as lower sales in several categories including consumer electronics, tools and apparel, for these results.
“Fourth quarter results were disappointing, especially in the Hometown and Hardware segment, where holiday sales and margins of our important Kenmore appliances and Craftsman tools significantly underperformed management’s expectations,” said Bruce Johnson, president and CEO. “In the Outlet segment, increased holiday promotional spending did not drive the expected sales increases. Total company January sales were negatively impacted by the unusually severe winter weather in many of our trade areas.”
Preliminary results for the full fiscal year show net income declining 41% to $35.55 million from $60.08 million, and net sales dropping 1.3% to $2.4 billion from $2.43 billion. Same-store sales decreased 2.2%.
Starbucks amends Keurig exclusivity agreement
Seattle – Starbucks Coffee Company is amending its exclusive agreement to provide Keurig Green Mountain Inc. with super-premium coffee pods. The companies have updated their agreement to continue to expand Starbucks’ range of K-Cup pack offerings and to promote expanded consumer choice.
In exchange for eliminating the super-premium coffee exclusivity terms of the existing agreement, Starbucks will receive improved business terms, including significantly expanded Starbucks K-Cup pack and variety types.
Kenmore and Craftsman can’t help Sears
Sears Hometown and Outlet Stores said fourth-quarter same-store sales declined 3.4% as two of the company’s best known brand had disappointing results. Sales in the fourth quarter declined 4.5% to $602.4 million due to the combination of a 3.4% same-store sales decline and an extra week in the fourth quarter the prior year, which added sales of $36.5 million. The same-store sales decline was made up of a 4% decline at the Hometown division and 1.5% decline at the outlet division. The comp decline was primarily driven by lower consumer electronics sales following a planned exit from the category in most Hometown stores, lower sales in the tool category in both segments, lower apparel sales in Outlet stores and lower major appliance sales in Hometown. The decreases were partially offset by higher lawn and garden sales in Hometown and higher major appliance and furniture sales in Outlet. If consumer electronics are excluded from the comp calculations, the total decline was only 1.1% overall, consisting of a 1% decrease at Hometown stores and a 1.3% decrease at Outlet stores. "Fourth quarter results were disappointing, especially in the Hometown and Hardware segment where holiday sales and margins of our important Kenmore appliances and Craftsman tools significantly underperformed management’s expectations,” said president and CEO Bruce Johnson. “In the Outlet segment, increased holiday promotional spending did not drive the expected sales increases. Total Company January sales were negatively impacted by the unusually severe winter weather in many of our trade areas.” That said, Johnson noted that the company made significant progress on four key strategic fronts during the quarter that leave it favorably positioned for 2014. For starters, Johnson said 30 new stores were opened during the past fiscal year with half of those coming in January. “Total sales from these 30 new stores during the first quarter of 2014 to date have met our expectations, with particularly strong sales from the new Outlet Stores (which accounted for 13 of the 30,” Johnson said. The company also continued its transition to a model whereby stores are operated primarily by independent dealers and franchisees. After 19 conversions in the fourth quarter, 1,115 of the company’s 1,260 stores are now operated by dealers and franchisees. Johnson also said the company achieved double-digit year-on-year growth in both online and multichannel sales, particularly at Searsoutlet.com where sales for the quarter grew nearly 80% from the prior year to approximately $11 million. Finally, new Outlet sourcing initiatives began to shift inventory positions in furniture, apparel and out-of-box appliances, to products Johnson said he is confident will deliver higher overall merchandise margins than in the fourth quarter of 2013.