Sears Hometown & Outlet is undergoing a thorough business transformation, and that had an impact on its second quarter financial results, which included separating the outlet segment results, which now are considered discontinued operations.
For the second quarter, the company recorded a net loss of $11 million, or 48 cents per diluted share, versus a net loss of $9.33 million, or 41 cents per diluted share, in the year-earlier period.
Comparable sales tumbled 21.7% in the quarter year over year, the company reported. Second quarter net sales were $168.6 million versus $302.9 million in the year-previous period. Operating loss was $16 million versus $17.2 million in the quarter a year before.
Sears Hometown & Outlet announced in June that the company, Transform Holdco and Transform Merger Corp., a wholly owned subsidiary of Transform, had entered into an agreement and plan of merger pursuant to which Transform Merger will merge with the company after giving it an opportunity to sell the Sears Outlet and Buddy’s Home Furnishing Stores businesses to a third party.
Will Powell, Sears Hometown & Outlet president and CEO, said, “Our announcement on June 3, 2019 that we had entered into a definitive merger agreement with Transform Holdco was the first of two major milestones for the company. The second major milestone was the August 27 announcement that we had entered into a definitive agreement with Liberty Tax, Inc. to sell our Sears Outlet segment and our Buddy’s Home Furnishing Stores as authorized by our merger agreement with Transform. This announcement followed an extensive process to market and seek to sell these businesses to a wide array of potential interested parties. We are currently estimating that, as a result of the sale of the Outlet/Buddy’s businesses, the net proceeds as defined in the Transform merger agreement from the Outlet/Buddy’s sale will be approximately $121 million. We are also currently estimating that as a result of the sale, the merger consideration payable by Transform in the merger for the company’s outstanding shares not owned by ESL Investments, Inc. and its affiliates will be approximately $3.25 per share in cash, which would be an increase of approximately $1, or approximately 44.4%, from the previously announced base merger consideration of $2.25 per share. The actual increase, if any, in the per share base merger consideration payable in the merger transaction with Transform will depend on the actual amount of net proceeds realized by the company from the Outlet/Buddy’s sale, which may be lower than the current estimate.”