Boston, MA 06/09/2014 (wallstreetpr) – Chain of retail store operator on home appliances, Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS) announced a sharp fall in its profit for the first quarter, as it continues to face combination of factors hurting its results. One among the reasons for dragging its bottom line is weak margin sales. The company’s sales slackened during the first quarter hurt by a fall in comparable store sales.
1Q Results
The company reported a sharp drop of 75.5% in profit to $3.68 million or 16 cents a share from $15.0 million or 65 cents a share in the year-ago quarter. It cited three reasons for the fall in profit.
Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS) disclosed the sales of lawn and garden were unfavorably impacted due to unseasonal cold spring in most of its trade areas thus affecting overall store traffic, weak margin product sales in its Outlet in the absence of sufficient high margin quantities appliances, and the hectic, competitive retail appliances environment, as rivals offered various sops including discounted price besides free delivery.
The company’s sales slackened 1.9% to $589.85 million from $601.12 million in the previous year quarter. Its total comparable store sales witnessed a drop of 6.2% and its lower initial franchise revenues contributed to the fall in its overall sales.
While net sales from Hometown segment dipped to $418.54 million from $444.8 million, its net sales from Outlet division grew to $171.32 million from $156.31 million in the year earlier quarter.
Other Metrics
Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS)’s gross margin fell to 24.4% from 25.7% in the last year first quarter due to weak margin on merchandise sales, fall in income from its Outlet apparel liquidation, and increased shrinkage of inventory in Outlet division by $3.5 million.
Similarly, its sales and administrative costs advanced to 22.9% of sales from 21.2% of sales in the year-ago quarter on higher owner commissions. The company closed the quarter with cash and cash equivalents of $23.1 million.
