Sears Hometown and Outlet Stores posted net income of $2.2 million, or nine cents per diluted share, for the first quarter ended May 2, versus $3.7 million, or 16 cents per diluted share, in the year-earlier period. Comparable store sales slipped 1.2%.
Net sales slid 1.2%, to $582.8 million while operating income decreased 36.9% to $4 million.
Bruce Johnson, the company’s president, said, “During the quarter our core operations, which exclude franchise sales, generated higher profits than recent quarters due to a more moderate promotional environment and good expense controls. We are encouraged by several aspects of our first quarter results. We made important strides in improving our business. We launched our America’s Appliance Experts initiative in over 50 stores and we launched the transformation of our information systems and operational processes. Also, we had strong cash flow that resulted in continued reductions in borrowings. Our improved inventory sourcing in the Outlet segment and the conversion of five Hardware stores to Outlet Stores reduced capital tied up in inventory. Outstanding borrowings were down to $30 million at the end of the first quarter of 2015, which was a decrease of $68.1 million and $54.1 million compared to the first quarter of 2014 and the fourth quarter of 2014, respectively. Our strong liquidity will allow us the flexibility to make investments in the business, both in-store and online, that will be designed to improve operating performance.”