Delaware | 001-35641 | 80-0808358 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
5500 Trillium Boulevard, Suite 501 Hoffman Estates, Illinois | 60192 | |||
(Address of principal executive offices) | (Zip code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
SEARS HOMETOWN AND OUTLET STORES, INC. | |
By: | /s/ E. J. BIRD |
E. J. Bird | |
Senior Vice President and Chief Financial Officer |
• | Net loss decreased $3.0 million to $30.3 million from $33.2 million |
• | Loss per share decreased $0.13 to $1.33 loss per share from $1.46 loss per share |
• | Comparable store sales decreased 8.5% |
• | Adjusted EBITDA improved $6.9 million to $5.5 million loss from $12.4 million loss |
• | Adjusted EBITDA for the fourth quarter of 2018 includes $6.8 million of negative impacts directly associated with the Sears Holdings Corporation ("Sears Holdings") bankruptcy filing on October 15, 2018 |
• | Net loss decreased $41.6 million to $53.5 million from $95.1 million |
• | Loss per share decreased $1.83 to $2.36 loss per share from $4.19 loss per share |
• | Comparable store sales decreased 4.6% |
• | Adjusted EBITDA improved $30.5 million to $16.0 million from $14.5 million loss |
• | Adjusted EBITDA for 2018 includes $8.5 million of negative impacts directly associated with the Sears Holdings bankruptcy filing |
Thousands | 13 Weeks Ended February 2, 2019 | 52 Weeks Ended February 2, 2019 | ||||||
Adjusted EBITDA | $ | (5,456 | ) | $ | 16,023 | |||
Impact from non-recurring Sears Holdings bankruptcy issues: | ||||||||
Protection agreement margin impact | 3,295 | $ | 3,795 | |||||
Unpaid prepetition subsidy and cash discounts due from Sears Holdings | — | 1,151 | ||||||
Advisory fees | 1,620 | 1,620 | ||||||
Event cancellation fees and related expenses | 1,910 | 1,910 | ||||||
Adjusted EBITDA excluding non-recurring Sears Holdings bankruptcy issues | $ | 1,369 | $ | 24,499 |
Thousands | 14 Weeks Ended February 3, 2018 | 53 Weeks Ended February 3, 2018 | ||||||
Adjusted EBITDA | $ | (12,368 | ) | $ | (14,525 | ) | ||
Impact of 53rd week in fiscal 2017 | (2,300 | ) | (2,300 | ) | ||||
Adjusted EBITDA excluding 53rd week | $ | (14,668 | ) | $ | (16,825 | ) |
• | Changes to our as-is appliance sourcing as well as lower promotional markdowns from price optimization led to margin improvement in the quarter of 800 basis points in our Outlet segment. Additionally, the Outlet segment has had positive comparable store sales of 2.5% since July when we anniversaried the impact of the change in our pricing strategy. |
• | In the fourth quarter 2018 lease-to-own comparable sales increased 34.1% and leasing's share of total sales increased to 10.0%, up 318 basis points compared to the fourth quarter 2017. For the full year, lease-to-own comparable sales increased 38.6%. |
• | SearsHometown.com and SearsOutlet.com sales were up 25.5% and 9.5%, respectively, compared to fourth quarter 2017. SearsHometown.com balance of sales grew 140 basis points compared to the fourth quarter 2017. SearsOutlet.com balance of sales grew 183 basis points compared to the fourth quarter 2017. |
• | In the fourth quarter we made some progress on our initiative to reduce the growing losses in our Hometown segment by closing, or starting the closure, of 105 stores in the segment. We had inventory investments in these stores of $28.8 million at the beginning of their inventory-liquidation process. As of the end of our fiscal year, inventory liquidation was complete in 81 of these stores while 24 stores had initiated inventory liquidations that were completed in February 2019. These store closings resulted in a one-time charge of $7.5 million in the fourth quarter, but advanced our efforts to reduce the growing losses in our Hometown segment and strengthen our balance sheet. A group of stores in our Hometown segment continue to provide an insufficient return for the capital we have invested in these stores (and for many stores the return was negative), and these stores, as a group, continue to generate growing negative adjusted EBITDA. During the quarter we continued our efforts to improve the performance of these unproductive stores through our business-improvement initiatives. Our efforts notwithstanding, these stores have not achieved, and we believe that |
• | Hometown gross margin decreased $23.1 million, or 43.0%, to $30.7 million in the fourth quarter of 2018. Hometown gross margin rate declined by 352 basis points to 16.2%. The decline in gross margin dollars was driven by sales volume decreases and a lower gross margin rate. The 352 basis point decrease in gross margin rate was primarily driven by higher accelerated store closing costs ($7.5 million in the fourth quarter of 2018 compared to $1.1 million in the fourth quarter of 2017), lower protection agreement sales due to disruptions from the Sears Holdings bankruptcy, and higher supply chain costs. Excluding the impact of the lower protection agreement sales and the higher closing store costs from both periods, the gross margin rate improved by 76 basis points in the fourth quarter of 2018 compared to the fourth quarter of 2017. |
• | Outlet gross margin increased $6.3 million, or 28.8%, to $28.3 million in the fourth quarter of 2018. Outlet gross margin rate improved by 800 basis points to 25.8% driven by higher margins on merchandise sales and lower closing store costs ($0.0 million in the fourth quarter of 2018 compared to $0.7 million in the fourth quarter of 2017), partially offset by lower protection agreement sales due to disruptions from the Sears Holdings bankruptcy. Excluding the impact of protection agreements and closing store costs from both periods, the gross margin rate improved 917 basis points in the fourth quarter of 2018 compared to the fourth quarter of 2017. |
• | Hometown adjusted EBITDA decreased $1.5 million to a $9.7 million loss in the fourth quarter of 2018 from a $8.1 million loss in the fourth quarter of 2017. The decrease was driven by higher closing store costs, lower protection agreement sales, and lower gross margin rate on lower volume, partially offset by lower selling and administrative expenses. |
• | Outlet adjusted EBITDA increased $8.5 million in the fourth quarter of 2018 to $4.2 million from a loss of $4.3 million in the fourth quarter of 2017. The improvement was driven by an improved gross margin rate and lower selling and administrative expenses. |
• | 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. |
Preliminary and subject to change | 13 and 14 Weeks Ended | 52 and 53 Weeks Ended | ||||||||||||||
thousands | February 2, 2019 | February 3, 2018 | February 2, 2019 | February 3, 2018 | ||||||||||||
Net loss | $ | (30,269 | ) | $ | (33,244 | ) | $ | (53,464 | ) | $ | (95,057 | ) | ||||
Income tax expense (benefit) | 304 | (130 | ) | 164 | 504 | |||||||||||
Other income | (18 | ) | (181 | ) | (367 | ) | (925 | ) | ||||||||
Interest expense | 4,019 | 2,444 | 14,676 | 8,058 | ||||||||||||
Operating loss | (25,964 | ) | (31,111 | ) | (38,991 | ) | (87,420 | ) | ||||||||
Depreciation and amortization | 3,588 | 3,129 | 12,374 | 13,039 | ||||||||||||
Impairment of property and equipment | 2,089 | 3,357 | 2,089 | 3,357 | ||||||||||||
Gain on the sale of assets | — | — | (1,358 | ) | — | |||||||||||
Provision for franchisee note losses, net of recoveries | (315 | ) | 1,541 | 2,594 | 7,361 | |||||||||||
IT transformation investments | 7,606 | 8,857 | 25,923 | 34,374 | ||||||||||||
Costs associated with accelerated store closings | 7,540 | 1,859 | 13,392 | 14,764 | ||||||||||||
Adjusted EBITDA | $ | (5,456 | ) | $ | (12,368 | ) | $ | 16,023 | $ | (14,525 | ) | |||||
Impact from non-recurring Sears Holdings bankruptcy issues | 6,825 | — | 8,476 | — | ||||||||||||
Impact of 53rd week in fiscal 2017 | — | (2,300 | ) | — | (2,300 | ) | ||||||||||
Adjusted EBITDA excluding non-recurring items | $ | 1,369 | $ | (14,668 | ) | $ | 24,499 | $ | (16,825 | ) |
Preliminary and subject to change | 13 and 14 Weeks Ended | 52 and 53 Weeks Ended | ||||||||||||||
Thousands | February 2, 2019 | February 3, 2018 | February 2, 2019 | February 3, 2018 | ||||||||||||
Operating loss | $ | (25,264 | ) | $ | (19,061 | ) | $ | (58,333 | ) | $ | (45,109 | ) | ||||
Depreciation and amortization | 1,884 | 1,458 | 6,263 | 5,378 | ||||||||||||
Impairment of property and equipment | 1,007 | 2,581 | 1,007 | 2,581 | ||||||||||||
Provision for franchisee note losses, net of recoveries | (94 | ) | (92 | ) | (245 | ) | (200 | ) | ||||||||
IT transformation investments | 5,267 | 5,881 | 17,950 | 22,847 | ||||||||||||
Accelerated closure of under-performing stores | 7,540 | 1,116 | 13,651 | 6,952 | ||||||||||||
Adjusted EBITDA | $ | (9,660 | ) | $ | (8,117 | ) | $ | (19,707 | ) | $ | (7,551 | ) |
Preliminary and subject to change | 13 and 14 Weeks Ended | 52 and 53 Weeks Ended | ||||||||||||||
Thousands | February 2, 2019 | February 3, 2018 | February 2, 2019 | February 3, 2018 | ||||||||||||
Operating (loss) income | $ | (700 | ) | $ | (12,050 | ) | $ | 19,342 | $ | (42,311 | ) | |||||
Depreciation and amortization | 1,704 | 1,671 | 6,111 | 7,661 | ||||||||||||
Impairment of property and equipment | 1,082 | 776 | 1,082 | 776 | ||||||||||||
Gain on sale of assets | — | — | (1,358 | ) | — | |||||||||||
Provision for franchisee note losses, net of recoveries | (221 | ) | 1,633 | 2,839 | 7,561 | |||||||||||
IT transformation investments | 2,339 | 2,976 | 7,973 | 11,527 | ||||||||||||
Accelerated closure of under-performing stores | — | 743 | (259 | ) | 7,812 | |||||||||||
Adjusted EBITDA | $ | 4,204 | $ | (4,251 | ) | $ | 35,730 | $ | (6,974 | ) |
• | The willingness and ability of Transform Holdco to perform all of its obligations in accordance with the terms and conditions of the Operative Agreements; |
• | We believe that Transform Holdco was recently formed, had no retail business operations prior to its acquisition of the Sears Assets and the assumption of the Operative Agreements, and will rely, at least initially, on Sears Holdings and its subsidiaries and other third parties to provide to Transform Holdco the merchandising and other services that Transform Holdco is obligated to provide to the Company in accordance with the Operative Agreements; |
• | The ability of Transform Holdco to resolve, on operational and financial terms that are satisfactory to Transform Holdco, its reported current disputes and future disputes, if any, with the Sears Holdings Companies regarding Transform Holdco's acquisition of the Sears Assets and the assumption of related obligations; |
• | Transform Holdco is not a public company, and it does not, and we believe likely will not, disclose publicly any information regarding its results of operations, financial condition, liquidity, cash flows, or overall ability to operate its businesses and provide merchandising and other services to the Company in accordance with the Operative Agreements (and Transform Holdco has not given the Company any of such information); |
• | Our ability to (1) significantly reduce or eliminate the Hometown segment's growing operating losses (due in part to increasing supply-chain costs and declining Craftsman and Kenmore merchandise availability, which are having a disproportionately adverse effect on the Hometown segment businesses) and (2) close, or seek the closure of, unproductive Hometown segment stores and to significantly reduce the inventory, marketing, promotion, supply chain, and other expenses associated with these stores; |
• | Our ability to generate the necessary liquidity to service our indebtedness and meet our other cash needs; |
• | With respect to the Sears Holdings Companies' bankruptcy proceedings and Transform Holdco’s assumption of the Operative Agreements, (1) the Senior ABL Facility provides for significant lender discretion, such as the ability to reduce loan advance-rates (through the imposition of reserves against the Company’s borrowing base), which could reduce the amounts that the Company could borrow or require the Company to repay amounts already borrowed and (2) the lenders could assert that they have no obligation to extend to the Company additional loans on the basis that the Company has suffered a “Material Adverse Effect” and (3) the Company’s inability to enforce any of the Separation Agreements could be an “Event of Default” under the Senior ABL Facility that would permit the lenders to accelerate and immediately call due all of the Company's outstanding loans; |
• | With respect to the Sears Holdings Companies' bankruptcy proceedings and Transform Holdco’s assumption of the Operative Agreements, (1) the Term Loan Agreement provides for significant lender discretion, such as the ability to increase reserves with respect to the Term Loan Agreement's borrowing base, which could require the establishment and maintenance of a reserve under, and thereby reduce the amounts that the Company could borrow under, the Senior ABL Facility, and could also require the Company to make a prepayment under the Term Loan Agreement, and (2) the Company’s inability to enforce any of the Separation Agreements could be an “Event of Default” under the Term Loan Agreement that would permit the lender to accelerate and immediately call due the Company's outstanding loan under the Term Loan Agreement; |
• | The Sears Holdings Unsecured Creditors Committee is investigating transfers to ESL and other current and former insiders of Sears Holdings in connection with “Insider Transactions,” including the Separation; |
• | The possible perceptions of our vendors, suppliers, lenders under the Senior ABL Facility and the Term Loan Agreement, and customers that, as a result of the Sears Holdings bankruptcy proceedings and Transform Holdco’s assumption of the Operative Agreements, the Company's ability to operate its businesses (especially the Company's Hometown segment businesses) has been materially and adversely affected; |
• | Transform Holdco, which has assumed the Operative Agreements, could decline to renew, or upon renewal materially modify to our material disadvantage, our rights under the Amended and Restated Merchandising Agreement, one of the Operative Agreements, pursuant to which we have rights to acquire merchandise branded with the KCD Marks from Transform Holdco (we do not have rights to purchase directly from manufacturers merchandise branded with the KCD Marks and, despite our efforts, we have been unable to obtain those rights); |
• | The Amended and Restated Merchandising Agreement provides that (1) if a third party that is not an affiliate of Transform Holdco (as assignee) acquires the rights to one or more (but less than all) of the KCD Marks Transform Holdco 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 Transform Holdco acquires the rights to all of the KCD Marks Transform Holdco may terminate the Amended and Restated Merchandising Agreement in its entirety, over which events we have no control; |
• | The sale by Transform 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; |
• | Our ability to offer merchandise and services that our customers want, including those branded with the KCD Marks; |
• | Transform Holdco may explore alternatives for its Kenmore, Craftsman, and Diehard businesses and further expand the presence of these brands including by evaluating potential partnerships or other transactions; |
• | The sale of Kenmore and Diehard products on Amazon.com; |
• | 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, our reliance on Transform Holdco for most products and services that are important to the successful operation of our business, and our potential need to rely on Transform Holdco for some products and services beyond the expiration of our agreements with Transform Holdco; |
• | We believe that Transform Holdco is seeking to negotiate supply agreements with its appliance, lawn and garden, tools, and other vendors, which vendors may not be willing to supply merchandise to Transform Holdco on terms (including vendor-payment terms for Transform Holdco’s merchandise purchases) that are acceptable to it (which payment terms, we believe, could become uneconomic for Transform Holdco and for us); |
• | The willingness of Transform Holdco’s appliance, lawn and garden, tools, and other vendors to continue to pay to Transform Holdco’s merchandise-related subsidies and allowances and cash discounts (Transform Holdco 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 2018); |
• | Our ability to resolve, on commercially reasonable terms, future disputes with Transform Holdco, if any, regarding the material terms and conditions of our agreements with Transform Holdco; |
• | Our ability to establish information, merchandising, logistics, and other systems separate from Transform Holdco that would be necessary to ensure continuity of merchandise supplies and services for our businesses if, in connection with Transform Holdco’s acquisition of the Sears Assets, vendors were to reduce, or cease, their merchandise sales to Transform Holdco or provide logistics and other services to Transform Holdco or if Transform Holdco were to reduce, or cease, its merchandise sales to us or reduce providing, or cease to provide, logistics and other services to us; |
• | If Transform Holdco’s sales of major appliances and lawn and garden merchandise to its retail customers decline Transform Holdco’s sales to us of outlet-value merchandise could decline; |
• | Our ability to maintain an effective and productive business relationship with Transform Holdco, especially if future disputes were to arise with respect to the terms and conditions of the Operative Agreements; |
• | Most of our agreements related to the Separation and our continuing relationship with Transform Holdco 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 Transform Holdco to provide computer systems acquired as part of the Sears Assets 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 TH-Supplied Systems”); |
• | SHO's TH-Supplied Systems could be subject to disruptions and data/security breaches (Sears Holdings announced during 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 during April 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's customers), and Transform Holdco 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 for our Outlet segment stores by the end of the first quarter of our 2019 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; |
• | The Senior ABL Facility will mature on the earliest of (1) February 29, 2020, (2) six months prior to the expiration of specified Operative Agreements unless they are extended to a date later than February 29, 2020 or are terminated on a basis reasonably satisfactory to the Senior ABL Facility lenders, and (3) acceleration of the maturity date following an event of default; |
• | 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; |
• | The Senior ABL Facility and the Term Loan Agreement each matures less than one year after the date we will issue our financial statements for fiscal 2018. The Company is in discussions with the administrative agent for the Senior ABL Facility about its extension or refinancing. While we believe that we will be able to extend or refinance the Senior ABL Facility prior to its maturity, an extension or refinancing has not occurred and cannot be considered "probable" as defined under applicable accounting standards. As a result, as we reported in our most recent Quarterly Report on Form 10-Q, "substantial doubt" as defined under applicable accounting standards is deemed to exist about our ability to continue as a going concern. Absent an extension or refinancing of the Senior ABL Facility, we expect that this substantial doubt will continue to exist and result in a going-concern explanatory paragraph in the audit opinion on our financial statements for fiscal 2018, which would require us to obtain a waiver from the lenders under the Senior ABL Facility and the Term Loan Agreement. |
• | Our ability to extend or refinance the Senior ABL Facility and refinance the Term Loan Agreement and obtain additional financing on acceptable terms; |
• | 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 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 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; |
• | 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. |
Preliminary and subject to change | 13 and 14 Weeks Ended | 52 and 53 Weeks Ended | ||||||||||||||
thousands | February 2, 2019 | February 3, 2018 | February 2, 2019 | February 3, 2018 | ||||||||||||
NET SALES | $298,520 | $ | 395,774 | $ | 1,449,948 | $ | 1,719,951 | |||||||||
COSTS AND EXPENSES | ||||||||||||||||
Cost of sales and occupancy | 239,585 | 320,022 | 1,126,752 | 1,371,408 | ||||||||||||
Selling and administrative | 79,222 | 100,377 | 349,082 | 419,567 | ||||||||||||
Impairment of property and equipment | 2,089 | 3,357 | 2,089 | 3,357 | ||||||||||||
Depreciation and amortization | 3,588 | 3,129 | 12,374 | 13,039 | ||||||||||||
Gain on the sale of assets | — | — | (1,358 | ) | — | |||||||||||
Total costs and expenses | 324,484 | 426,885 | 1,488,939 | 1,807,371 | ||||||||||||
Operating loss | (25,964 | ) | (31,111 | ) | (38,991 | ) | (87,420 | ) | ||||||||
Interest expense | (4,019 | ) | (2,444 | ) | (14,676 | ) | (8,058 | ) | ||||||||
Other income | 18 | 181 | 367 | 925 | ||||||||||||
Loss before income taxes | (29,965 | ) | (33,374 | ) | (53,300 | ) | (94,553 | ) | ||||||||
Income tax (expense) benefit | (304 | ) | $ | 130 | $ | (164 | ) | $ | (504 | ) | ||||||
NET LOSS | (30,269 | ) | (33,244 | ) | (53,464 | ) | (95,057 | ) | ||||||||
NET LOSS PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS | ||||||||||||||||
Basic: | $ | (1.33 | ) | $ | (1.46 | ) | $ | (2.36 | ) | $ | (4.19 | ) | ||||
Diluted: | (1.33 | ) | (1.46 | ) | (2.36 | ) | (4.19 | ) | ||||||||
Basic weighted average common shares outstanding | 22,702 | 22,702 | 22,702 | 22,702 | ||||||||||||
Diluted weighted average common shares outstanding | 22,702 | 22,702 | 22,702 | 22,702 |
Preliminary and subject to change | ||||||||
thousands | February 2, 2019 | February 3, 2018 | ||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 15,110 | $ | 10,402 | ||||
Accounts and franchisee receivables, net | 11,916 | 14,672 | ||||||
Merchandise inventories | 277,285 | 336,294 | ||||||
Prepaid expenses and other current assets | 9,452 | 7,131 | ||||||
Total current assets | 313,763 | 368,499 | ||||||
PROPERTY AND EQUIPMENT, net | 27,731 | 36,049 | ||||||
OTHER ASSETS, net | 2,277 | 8,140 | ||||||
TOTAL ASSETS | $ | 343,771 | $ | 412,688 | ||||
LIABILITIES | ||||||||
CURRENT LIABILITIES | ||||||||
Short-term borrowings | $ | 93,000 | $ | 137,900 | ||||
Term Loan, net | 39,057 | — | ||||||
Payable to Sears Holdings Corporation | 14,080 | 28,082 | ||||||
Accounts payable | 19,830 | 15,741 | ||||||
Other current liabilities | 56,009 | 53,142 | ||||||
Total current liabilities | 221,976 | 234,865 | ||||||
OTHER LONG-TERM LIABILITIES | 1,839 | 2,284 | ||||||
TOTAL LIABILITIES | 223,815 | 237,149 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock: $.01 par value; 400,000 shares authorized, 22,702 issued and outstanding in 2018 and 2017, respectively | 227 | 227 | ||||||
Capital in excess of par value | 555,378 | 555,378 | ||||||
Accumulated deficit | (435,649 | ) | (380,066 | ) | ||||
TOTAL STOCKHOLDERS' EQUITY | 119,956 | 175,539 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 343,771 | $ | 412,688 |
Preliminary and subject to change | 13 Weeks Ended vs. 14 Weeks Ended | 52 Weeks Ended vs. 53 Weeks Ended | |||||||||||||
Thousands, except for number of stores | February 2, 2019 | February 3, 2018 | February 2, 2019 | February 3, 2018 | |||||||||||
NET SALES | $ | 188,885 | $ | 272,414 | $ | 958,518 | $ | 1,177,222 | |||||||
Comparable store sales % | (13.0 | )% | (10.5 | )% | (6.0 | )% | (8.1 | )% | |||||||
COSTS AND EXPENSES | |||||||||||||||
Cost of sales and occupancy | 158,219 | 218,605 | 768,626 | 931,078 | |||||||||||
Selling and administrative | 53,039 | 68,831 | 240,955 | 283,294 | |||||||||||
Selling and administrative expense as a percentage of net sales | 28.1 | % | 25.3 | % | 25.1 | % | 24.1 | % | |||||||
Impairment of property and equipment | 1,007 | 2,581 | 1,007 | 2,581 | |||||||||||
Depreciation and amortization | 1,884 | 1,458 | 6,263 | 5,378 | |||||||||||
Total costs and expenses | 214,149 | 291,475 | 1,016,851 | 1,222,331 | |||||||||||
Operating loss | $ | (25,264 | ) | $ | (19,061 | ) | $ | (58,333 | ) | $ | (45,109 | ) | |||
Gross margin dollars | 30,666 | 53,809 | 189,892 | 246,144 | |||||||||||
Margin rate | 16.2 | % | 19.8 | % | 19.8 | % | 20.9 | % | |||||||
Total Hometown stores | 549 | 768 |
Preliminary and subject to change | 13 Weeks Ended vs. 14 Weeks Ended | 52 Weeks Ended vs. 53 Weeks Ended | ||||||||||||||
Thousands, except for number of stores | February 2, 2019 | February 3, 2018 | February 2, 2019 | February 3, 2018 | ||||||||||||
NET SALES | $ | 109,635 | $ | 123,360 | $ | 491,430 | $ | 542,729 | ||||||||
Comparable store sales % | 0.2 | % | (16.3 | )% | (1.8 | )% | (9.1 | )% | ||||||||
COSTS AND EXPENSES | ||||||||||||||||
Cost of sales and occupancy | 81,366 | 101,417 | 358,126 | 440,330 | ||||||||||||
Selling and administrative | 26,183 | 31,546 | 108,127 | 136,273 | ||||||||||||
Selling and administrative expense as a percentage of net sales | 23.9 | % | 25.6 | % | 22.0 | % | 25.1 | % | ||||||||
Impairment of property and equipment | 1,082 | 776 | 1,082 | 776 | ||||||||||||
Depreciation and amortization | 1,704 | 1,671 | 6,111 | 7,661 | ||||||||||||
Gain on the sale of assets | — | — | (1,358 | ) | — | |||||||||||
Total costs and expenses | 110,335 | 135,410 | 472,088 | 585,040 | ||||||||||||
Operating (loss) income | $ | (700 | ) | $ | (12,050 | ) | $ | 19,342 | $ | (42,311 | ) | |||||
Gross margin dollars | 28,269 | 21,943 | 133,304 | 102,399 | ||||||||||||
Margin rate | 25.8 | % | 17.8 | % | 27.1 | % | 18.9 | % | ||||||||
Total Outlet stores | 128 | 132 |