Document_and_Entity_Informatio
Document and Entity Information Document (USD $) | 12 Months Ended | ||
Jan. 31, 2015 | Apr. 01, 2015 | Aug. 02, 2014 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Jan-15 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Sears Hometown & Outlet Stores, Inc. | ||
Entity Central Index Key | 1548309 | ||
Current Fiscal Year End Date | -30 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 22,735,849 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $229,566,957 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 9 Months Ended | 12 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 |
NET SALES | $2,453,606 | $2,356,033 | $2,421,562 |
COSTS AND EXPENSES | |||
Cost of sales and occupancy | 1,840,207 | 1,803,497 | 1,843,418 |
Selling and administrative | 504,400 | 546,636 | 506,630 |
Impairment of goodwill | 0 | 167,000 | 0 |
Depreciation | 9,474 | 10,172 | 12,006 |
Gain on the sale of assets | 0 | -113 | -1,567 |
Total costs and expenses | 2,354,081 | 2,527,192 | 2,360,487 |
Operating income (loss) | 99,525 | -171,159 | 61,075 |
Interest expense | -899 | -3,861 | -3,046 |
Other income | 1,354 | 3,149 | 1,854 |
Income (loss) before income taxes | 99,980 | -171,871 | 59,883 |
Income tax benefit (expense) | -39,900 | 3,066 | -24,333 |
NET INCOME (LOSS) | $60,080 | ($168,805) | $35,550 |
NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO SHAREHOLDERS | |||
Basic (in usd per share) | $2.60 | ($7.45) | $1.55 |
Diluted (in usd per share) | $2.60 | ($7.45) | $1.55 |
Basic weighted average common shares outstanding (in shares) | 23,100 | 22,666 | 22,984 |
Diluted weighted average common shares outstanding (in shares) | 23,100 | 22,666 | 22,989 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Jan. 31, 2015 | Feb. 01, 2014 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS | ||
Cash and cash equivalents | $19,746 | $23,475 |
Accounts and franchisee receivables, net | 15,456 | 19,252 |
Merchandise inventories | 442,743 | 482,107 |
Prepaid expenses and other current assets | 19,350 | 13,216 |
Total current assets | 497,295 | 538,050 |
PROPERTY AND EQUIPMENT, net | 50,708 | 48,973 |
GOODWILL | 0 | 167,000 |
LONG-TERM DEFERRED TAXES | 54,273 | 52,672 |
OTHER ASSETS, net | 43,446 | 40,490 |
TOTAL ASSETS | 645,722 | 847,185 |
CURRENT LIABILITIES | ||
Short-term borrowings | 84,100 | 99,100 |
Payable to Sears Holdings Corporation | 61,089 | 68,396 |
Accounts payable | 14,888 | 24,129 |
Other current liabilities | 60,938 | 60,319 |
Current portion of capital lease obligations | 147 | 662 |
Total current liabilities | 221,162 | 252,606 |
CAPITAL LEASE OBLIGATIONS | 176 | 95 |
OTHER LONG-TERM LIABILITIES | 2,098 | 4,259 |
TOTAL LIABILITIES | 223,436 | 256,960 |
COMMITMENTS AND CONTINGENCIES (Note 11) | ||
STOCKHOLDERS' EQUITY | ||
Common stock: $.01 par value; Authorized shares: 400,000; Issued shares: 22,736 and 22,753, respectively; Outstanding share: 22,736 and 22,753, respectively | 227 | 228 |
Capital in excess of par value | 547,888 | 547,021 |
Retained earnings (deficit) | -125,829 | 42,976 |
TOTAL STOCKHOLDERS' EQUITY | 422,286 | 590,225 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $645,722 | $847,185 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Jan. 31, 2015 | Feb. 01, 2014 |
Common Stock, Par Value (in usd per share) | $0.01 | $0.01 |
Common Stock, Shares Authorized | 400,000,000 | 400,000,000 |
Common Stock, Shares Issued | 22,736,000 | 22,753,000 |
Common Stock, Outstanding | 22,736,000 | 22,753,000 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | $60,080 | ($168,805) | $35,550 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | |||
Depreciation | 9,474 | 10,172 | 12,006 |
Share based compensation | 0 | 866 | 911 |
Gain on the sale of assets | 0 | -113 | -1,567 |
Impairment of goodwill | 0 | 167,000 | 0 |
Provision for losses on franchisee receivables | 0 | 13,055 | 0 |
Change in operating assets and liabilities: | |||
Accounts and franchisee receivables | -10,301 | -12,988 | -26,823 |
Merchandise inventories | -34,779 | 39,364 | -53,670 |
Payable to Sears Holdings Corporation | 79,491 | -7,307 | -11,095 |
Accounts payable | 14,674 | -9,241 | -7,701 |
Store closing accruals | -2,201 | 0 | 0 |
Customer deposits | 3,046 | -5,306 | 633 |
Deferred income taxes | -1,641 | -7,129 | 18,614 |
Other operating assets | -2,602 | 1,069 | 1,525 |
Other operating liabilities | 6,343 | 3,763 | -22,751 |
Net cash provided by (used in) operating activities | 121,584 | 24,400 | -54,368 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Proceeds from sales of property and investments | 0 | 154 | 2,641 |
Purchases of property and equipment | -8,110 | -12,849 | -10,704 |
Net cash used in investing activities | -8,110 | -12,695 | -8,063 |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Transfers to Sears Holdings Corporation | -12,264 | 0 | 0 |
Dividend paid to Sears Holdings Corporation | -100,000 | 0 | 0 |
Common stock repurchased and retired | 0 | 0 | -12,523 |
Payments of capital lease obligations | -1,836 | -434 | -739 |
Net short-term borrowings (payments) | 20,000 | -15,000 | 79,100 |
Net cash provided by (used in) financing activities | -94,100 | -15,434 | 65,838 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 19,374 | -3,729 | 3,407 |
CASH AND CASH EQUIVALENTSbBeginning of period | 694 | 23,475 | 20,068 |
CASH AND CASH EQUIVALENTSbEnd of period | 19,746 | 23,475 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||
Cash paid for interest | 899 | 3,622 | 3,226 |
Cash paid for income taxes | $0 | $824 | $21,022 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Total | Common Stock [Member] | Capital in Excess of Par Value [Member] | Retained Earnings [Member] | Divisional Equity prior to the Separation [Member] |
In Thousands, except Share data, unless otherwise specified | |||||
Beginning balance at Jan. 28, 2012 | $538,106 | $0 | $0 | $0 | $538,106 |
Beginning balance, Shares at Jan. 28, 2012 | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 60,080 | 9,481 | 50,599 | ||
Net transfer to Sears Holdings Corporation | -12,264 | -12,264 | |||
Dividend paid to Sears Holdings Corporation | -100,000 | -100,000 | |||
Reclassification of divisional equity to common stock and additional paid in capital in conjunction with the Separation | 0 | -231 | -476,210 | 0 | 476,441 |
Reclassification of divisional equity to common stock and additional paid in capital in conjunction with the Separation, Shares | 23,100,000 | ||||
Tax adjustments related to the Separation | 80,365 | 0 | 80,365 | 0 | 0 |
Ending balance at Feb. 02, 2013 | 566,287 | 231 | 556,575 | 9,481 | 0 |
Ending balance, Shares at Feb. 02, 2013 | 23,100,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 35,550 | 35,550 | |||
Common stock repurchased and retired | -12,523 | -4 | -10,464 | -2,055 | 0 |
Common stock repurchased and retired, shares | -434,000 | ||||
Share-based compensation | 911 | 1 | 910 | 0 | 0 |
Share-based compensation, shares | 87,000 | ||||
Ending balance at Feb. 01, 2014 | 590,225 | 228 | 547,021 | 42,976 | 0 |
Ending balance, Shares at Feb. 01, 2014 | 22,753,000 | 22,753,000 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | -168,805 | -168,805 | |||
Common stock repurchased and retired | -12,500 | ||||
Common stock repurchased and retired, shares | -434,398 | ||||
Share-based compensation | 866 | -1 | 867 | 0 | 0 |
Share-based compensation, shares | -17,000 | ||||
Ending balance at Jan. 31, 2015 | $422,286 | $227 | $547,888 | ($125,829) | $0 |
Ending balance, Shares at Jan. 31, 2015 | 22,736,000 | 22,736,000 |
Background_and_Basis_of_Presen
Background, and Basis of Presentation and Significant Accounting Policies | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
BACKGROUND, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | BACKGROUND, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Background | |||||||||||||
Sears Hometown and Outlet Stores, Inc. is a national retailer primarily focused on selling home appliances, hardware, tools and lawn and garden equipment. As of January 31, 2015, the Company or its dealers and franchisees operated a total of 1,260 stores across all 50 states and in Puerto Rico and Bermuda. In these notes the terms "we," "us," "our," "SHO," and the "Company" refer to Sears Hometown and Outlet Stores, Inc. and its subsidiaries. | |||||||||||||
Description of the Separation | |||||||||||||
On October 11, 2012, Sears Holdings Corporation ("Sears Holdings") completed the separation of its Sears Hometown and Hardware and Sears Outlet businesses (the "Separation"). As part of the Separation, in August 2012 through a series of intercompany transactions Sears Holdings and several of its subsidiaries transferred the assets and liabilities comprising the Sears Hometown and Hardware and Sears Outlet businesses to SHO, which was formed in April 2012 as a wholly owned subsidiary of Sears Holdings. Effective upon the Separation, Sears Holdings ceased to own shares of our common stock, and thereafter our common stock began trading on the NASDAQ Stock Market under the trading symbol "SHOS." | |||||||||||||
As part of the Separation, Sears Holdings contributed to SHO equity intercompany balances due to/from Sears Holdings, which included amounts arising from pre-Separation purchases of merchandise inventories and which are included in Divisional Equity. After the Separation, the Company continues to purchase most of its merchandise from Sears Holdings and amounts payable to Sears Holdings are reflected separately on the consolidated balance sheet. | |||||||||||||
Basis of Presentation | |||||||||||||
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. | |||||||||||||
Prior to the Separation, the financial statements represented the Hometown and Hardware and Outlet businesses of Sears Holdings and with respect to all periods prior to the Separation were derived from the consolidated financial statements and accounting records of Sears Holdings, principally representing the historical results of operations and the historical basis of assets and liabilities of the Company's business. As pre-Separation business operations of Sears Holdings, we did not maintain our own legal, tax, and certain other corporate support functions. In connection with the Separation, Sears Holdings and SHO entered into services agreements to provide SHO with certain support services under the terms described in Note 7. The costs and allocations charged to the Company by Sears Holdings do not necessarily reflect the costs of obtaining the services from unaffiliated third parties or of the Company providing the applicable services itself. The consolidated financial statements contained herein, as they reflect information from 2012, may not be indicative of (1) the Company’s financial position, operating results, and cash flows in the future or (2) what the Company’s financial position, operating results, and cash flows would have been if the Hometown and Hardware and Outlet businesses of Sears Holdings had been a combined stand-alone business during all periods prior to the Separation. | |||||||||||||
We operate through two segments--our Sears Hometown and Hardware segment ("Hometown") and our Sears Outlet segment ("Outlet"). | |||||||||||||
Income Per Common Share | |||||||||||||
In connection with the Separation, holders of subscription rights that had been distributed to Sears Holdings' stockholders purchased from Sears Holdings a total of 23.1 million shares of our common stock. This share amount has been utilized for the calculation of basic and diluted income per share for all periods prior to the Separation. For the share amount for any time period post-Separation, we utilized the weighted-average common stock outstanding during the period. Dilutive income per share includes the dilutive effect of potential common shares. | |||||||||||||
Variable Interest Entities and Consolidation | |||||||||||||
The Financial Accounting Standards Board ("FASB") has issued guidance on variable interest entities and consolidation for determining whether an entity is a variable interest entity as well as the methods permitted for determining the primary beneficiary of a variable interest entity. In addition, this guidance requires ongoing reassessments of whether a company is the primary beneficiary of a variable interest entity and disclosures related to a company’s involvement with a variable interest entity. | |||||||||||||
On an ongoing basis the Company evaluates its business relationships, such as those with its dealers, franchisees, and suppliers, to identify potential variable interest entities. Generally, these businesses qualify for a scope exception under the consolidation guidance, or, where a variable interest exists, the Company does not possess the power to direct the activities that most significantly impact the economic performance of these businesses. The Company has not consolidated any of such entities in the periods presented. | |||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||
Fiscal Year | |||||||||||||
Our fiscal years end on the Saturday closest to January 31. Unless otherwise stated, references to specific years in these notes are to fiscal years. The following fiscal periods are presented herein. | |||||||||||||
Fiscal Year | Ended | Weeks | |||||||||||
2014 | January 31, 2015 | 52 | |||||||||||
2013 | February 1, 2014 | 52 | |||||||||||
2012 | February 2, 2013 | 53 | |||||||||||
Use of Estimates | |||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events. The estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances. Adjustments to estimates and assumptions are made when facts and circumstances dictate. As future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying consolidated financial statements. Significant estimates and assumptions are required as part of determining inventory and accounts and franchisee receivables valuation, estimating depreciation and recoverability of long-lived assets, establishing insurance, warranty, legal and other reserves, performing goodwill and long-lived asset impairment analysis, and establishing valuation allowances on deferred income tax assets and reserves for tax examination exposures. | |||||||||||||
Cash and Cash Equivalents | |||||||||||||
Cash equivalents include (1) all highly liquid investments with original maturities of three months or less at the date of purchase and (2) deposits in-transit from banks for payments related to third-party credit card and debit card transactions. | |||||||||||||
Allowance for Doubtful Accounts | |||||||||||||
We provide an allowance for doubtful accounts based on both historical experience and a specific identification basis. Allowances for doubtful accounts on accounts and notes receivable balances were $11.4 million at January 31, 2015 and $0 at February 1, 2014. Our accounts receivable balance is comprised of various vendor-related and customer-related accounts receivable. Our notes receivable balance is comprised of promissory notes that relate primarily to the sale of assets for our franchised locations. | |||||||||||||
The Company recognizes a provision for losses on franchisee receivables (which consist primarily of franchisee promissory notes) in an amount equal to estimated probable losses net of recoveries. The provision is based on an analysis of expected future write-offs, existing economic conditions, and an assessment of specific identifiable franchisee promissory notes and other franchisee receivables considered at risk or uncollectible. The expense associated with the provision for losses on franchisee receivables is recognized as selling, general, and administrative expense. | |||||||||||||
Merchandise Inventories | |||||||||||||
Merchandise inventories are valued at the lower of cost or market. Merchandise inventories are valued under the retail inventory method, or "RIM," using primarily a last-in, first-out, or "LIFO," cost-flow assumption. | |||||||||||||
Inherent in RIM calculations are certain significant management judgments and estimates including, among others, merchandise markons, markups, markdowns, and shrinkage, which significantly impact the ending inventory valuation at cost and resulting gross margins. The methodologies utilized by us in our application of RIM are consistent for all periods presented. Such methodologies include the development of the cost-to-retail ratios, the groupings of homogeneous classes of merchandise, the development of shrinkage and obsolescence reserves, the accounting for price changes, and the computations inherent in the LIFO adjustment (where applicable). Management believes that RIM provides an inventory valuation that reasonably approximates cost and results in carrying inventory at the lower of cost or market. The inventory allowance for shrinkage and obsolescence was $12.1 million at January 31, 2015 and $11.5 million at February 1, 2014. | |||||||||||||
In connection with our LIFO calculation we estimate the effects of inflation on inventories by utilizing external price indices determined by the U.S. Bureau of Labor Statistics. If we had used the first-in, first-out, or "FIFO" method of inventory valuation instead of the LIFO method, merchandise inventories would have been $0.9 million higher at January 31, 2015 and $1.1 million higher at February 1, 2014. | |||||||||||||
Vendor Rebates and Allowances | |||||||||||||
Sears Holdings receives rebates and allowances from vendors through a variety of programs and arrangements intended to offset the costs of promoting and selling the vendors' products. Sears Holdings allocates a portion of the rebates and allowances to us based on shipments to or sales of the related products to the Company. These vendor payments are recognized and recorded as a reduction to the cost of merchandise inventories when earned and, thereafter, as a reduction of cost of sales and occupancy as the merchandise is sold. Up-front consideration received from vendors linked to purchases or other commitments is initially deferred and amortized ratably to cost of sales and occupancy over the life of the contract or as performance of the activities specified by the vendor to earn the fee is completed. | |||||||||||||
Property and Equipment | |||||||||||||
Property and equipment are recorded at cost, less accumulated depreciation. Additions and substantial improvements are capitalized and include expenditures that materially extend the useful lives of existing facilities and equipment. Maintenance and repairs that do not materially improve or extend the lives of the respective assets are expensed as incurred. | |||||||||||||
Property and equipment consists of the following: | |||||||||||||
thousands | 31-Jan-15 | 1-Feb-14 | |||||||||||
Land | $ | 1,981 | $ | 1,978 | |||||||||
Buildings and improvements | 54,601 | 54,291 | |||||||||||
Furniture, fixtures and equipment | 35,104 | 32,388 | |||||||||||
Capitalized leases | 799 | 8,458 | |||||||||||
Total property and equipment | 92,485 | 97,115 | |||||||||||
Less: accumulated depreciation | (41,777 | ) | (48,142 | ) | |||||||||
Total property and equipment, net | $ | 50,708 | $ | 48,973 | |||||||||
Depreciation expense, which includes depreciation on assets under capital leases, is recorded over the estimated useful lives of the respective assets using the straight-line method for financial statement purposes and accelerated methods for tax purposes. The range of lives are generally 15 to 25 years for buildings, 3 to 10 years for furniture, fixtures, and equipment, and 3 to 5 years for computer systems and equipment. Leasehold improvements are depreciated over the shorter of the associated lease term or the estimated useful life of the asset. | |||||||||||||
Impairment of Long-Lived Assets and Costs Associated with Exit Activities | |||||||||||||
In accordance with accounting standards governing the impairment or disposal of long-lived assets, the carrying value of long-lived assets, including property and equipment, is evaluated whenever events or changes in circumstances indicate that a potential impairment has occurred. Factors that could result in an impairment review include, but are not limited to, a current period cash flow loss combined with a history of cash flow losses, current cash flows that may be insufficient to recover the investment in the property over the remaining useful life, or a projection that demonstrates continuing losses associated with the use of a long-lived asset, significant changes in the manner of use of the assets, or significant changes in business strategies. An impairment loss is recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset (if any) are less than the carrying value of the asset. When an impairment loss is recognized, the carrying amount of the asset is reduced to its estimated fair value as determined based on quoted market prices or through the use of other valuation techniques. We did not record any significant impairment charges with respect to long-lived assets in our 2014, 2013, or 2012 fiscal years. See Note 5 regarding the $167.0 million non-cash goodwill impairment charge we recorded in the third quarter of our 2014 fiscal year. | |||||||||||||
We account for costs associated with location closings in accordance with accounting standards pertaining to accounting for costs associated with exit or disposal activities and compensation. When management makes a decision to close a location we record a liability as of that date for the costs associated with the closing. The recorded liability includes employee severance, inventory markdowns, and other liquidation fees. We record a liability for future lease costs (net of estimated sublease income) when we cease to use the location. | |||||||||||||
Leases | |||||||||||||
We lease certain stores, office facilities, computers and transportation equipment. The determination of operating and capital lease obligations is based on the expected durations of the leases and contractual minimum lease payments specified in the lease agreements. For certain stores, amounts in excess of these minimum lease payments are payable based upon a specified percentage of sales. Contingent rent is accrued during the period it becomes probable that a particular store will achieve a specified sales level thereby triggering a contingent rental obligation. Certain leases also include an escalation clause or clauses and renewal option clauses calling for increased rents. Where the lease contains an escalation clause or concession such as a rent holiday, rent expense is recognized using the straight-line method over the term of the lease. We have subleases with Sears Holdings for 83 locations. We had rent expense paid to Sears Holdings of $27.8 million, $27.3 million and $30.9 million in 2014, 2013 and 2012, respectively. | |||||||||||||
Rental expense for operating leases was as follows: | |||||||||||||
Fiscal Year | |||||||||||||
thousands | 2014 | 2013 | 2012 | ||||||||||
Minimum rentals | $ | 63,115 | $ | 57,679 | $ | 52,294 | |||||||
Less-Sublease rentals | (28,457 | ) | (19,678 | ) | (14,626 | ) | |||||||
Total | $ | 34,658 | $ | 38,001 | $ | 37,668 | |||||||
Minimum lease obligations excluding taxes, insurance and other expenses are as follows: | |||||||||||||
Fiscal Year | Capital Leases | Operating Leases | |||||||||||
thousands | |||||||||||||
2015 | $ | 147 | $ | 60,008 | |||||||||
2016 | 58 | 50,830 | |||||||||||
2017 | 46 | 40,367 | |||||||||||
2018 | 46 | 25,311 | |||||||||||
2019 | 26 | 12,267 | |||||||||||
Thereafter | — | 19,764 | |||||||||||
Total Minimum Lease Payments | 323 | 208,547 | |||||||||||
Less - Sublease Income on Leased Properties | — | (78,295 | ) | ||||||||||
Net Minimum Lease Payments | 323 | $ | 130,252 | ||||||||||
Less: | |||||||||||||
Implicit Interest | — | ||||||||||||
Capital Lease Obligations | 323 | ||||||||||||
Less Current Portion of Capital Lease Obligations | (147 | ) | |||||||||||
Long-term Capital Lease Obligations | $ | 176 | |||||||||||
Warranty Reserves | |||||||||||||
Prior to the Separation, we were responsible for providing some instances of warranty coverage on certain Kenmore, Craftsman and DieHard products that we sold. We were self-insured for certain costs related to these claims. Our liability reflected on the Consolidated Balance Sheet, classified within other current liabilities, represented an estimate of the ultimate cost of claims incurred and included those not yet reported at the balance sheet date. In estimating this liability, we utilized loss development factors based on Company-specific data to project the future development of incurred losses. Loss estimates were adjusted based upon actual claims settlements and reported claims. | |||||||||||||
The following table presents changes in the Company’s warranty reserves: | |||||||||||||
thousands | 31-Jan-15 | February 1, 2014 | |||||||||||
Warranty reserve, beginning of period | $ | — | $ | 3,734 | |||||||||
Expense accruals during the period | — | — | |||||||||||
Payments made under warranties | — | (3,734 | ) | ||||||||||
Warranty reserve, end of period | $ | — | $ | — | |||||||||
Post-Separation, the Company purchases merchandise from Sears Holdings with warranty. The Company expects the incrementally higher product costs to be similar to the warranty costs incurred to service products that were purchased without warranty prior to the Separation. | |||||||||||||
Insurance Programs | |||||||||||||
Prior to the Separation the Company participated in Sears Holdings’ insurance programs. Post-Separation we maintain with third-party insurance companies our own insurance arrangements for exposures incurred post-Separation for a number of risks including worker’s compensation and general liability claims. Insurance expense of $6 million, $7 million and $6 million was recorded during 2014, 2013 and 2012, respectively. | |||||||||||||
Loss Contingencies | |||||||||||||
We account for contingent losses in accordance with accounting standards pertaining to loss contingencies. Under accounting standards, loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. These estimates are often initially developed substantially earlier than the ultimate loss is known, and the estimates are refined each accounting period, as additional information is known. | |||||||||||||
Revenue Recognition | |||||||||||||
Revenues include sales of merchandise, commissions on merchandise sales made through www.sears.com and www.searsoutlet.com, services and extended-service plans, and delivery and handling revenues related to merchandise sold. We recognize revenues from retail operations at the later of the point of sale or the delivery of goods to the end user. Net sales are presented net of any taxes collected from customers and remitted or payable to governmental authorities. We recognize revenues from commissions on services and extended-service plans, and delivery and handling revenues related to merchandise sold, at the point of sale as we are not the primary obligor with respect to such services and have no future obligations for future performance. | |||||||||||||
The Company accepts Sears Holdings gift cards as tender for purchases and is reimbursed by Sears Holdings for gift cards tendered. | |||||||||||||
Reserve for Sales Returns and Allowances | |||||||||||||
Revenues from merchandise sales and services are reported net of estimated returns and allowances and exclude sales taxes. The reserve for returns and allowances is calculated as a percentage of sales based on historical return percentages. Estimated returns are recorded as a reduction of sales and cost of sales. The reserve for returns and allowances was $2 million at January 31, 2015 and $2 million at February 1, 2014. | |||||||||||||
Cost of Sales and Occupancy | |||||||||||||
Cost of sales and occupancy are comprised principally of merchandise costs, warehousing and distribution (including receiving and store delivery) costs, retail store occupancy costs, home services and installation costs, warranty cost, royalties payable to Sears Holdings related to our sale of products branded with one of the KENMORE®, CRAFTSMAN®, and DIEHARD® marks (the "KCD Marks," and products branded with one of the KCD Marks are referred to as the "KCD Products"), customer shipping and handling costs, vendor allowances, markdowns, and physical inventory losses. The KCD Marks are owned by subsidiaries of Sears Holdings. | |||||||||||||
Dealer and Franchisee Commissions | |||||||||||||
In accordance with our agreements with our dealers and franchisees, we pay commissions to our dealers and franchisees on the net sales of merchandise and extended-service plans. In addition, each dealer and franchisee can earn commissions for third-party gift cards sold and can earn marketing support, home improvement referrals, rent support, and other items. Commission costs are expensed as incurred and reflected within selling and administrative expenses. Commission costs were $297 million, $261 million, and $242 million in 2014, 2013 and 2012, respectively. | |||||||||||||
Selling and Administrative Expenses | |||||||||||||
Selling and administrative expenses are comprised principally of dealer and franchisee commissions, payroll and benefits costs for retail and support employees, advertising, pre-opening costs, and other administrative expenses. | |||||||||||||
Pre-Opening Costs | |||||||||||||
Pre-opening and start-up activity costs are expensed in the period in which they occur. | |||||||||||||
Advertising Costs | |||||||||||||
Advertising costs are expensed as incurred, generally the first time the advertising occurs, and were $74 million, $67 million and $67 million for 2014, 2013 and 2012, respectively. These costs are included within selling and administrative expenses in the accompanying consolidated statements of operations. | |||||||||||||
Income Taxes | |||||||||||||
We provide deferred income tax assets and liabilities based on the estimated future tax effects of differences between the financial and tax basis of assets and liabilities based on currently enacted tax laws. The tax balances and income tax expense recognized by us are based on management’s interpretation of the tax laws of multiple jurisdictions. Income tax expense also reflects our best estimates and assumptions regarding, among other things, the level of future taxable income, tax planning, and any valuation allowance. Future changes in tax laws, changes in projected levels of taxable income, tax planning, and adoption and implementation of new accounting standards could impact the effective tax rate and tax balances recorded by us. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income (loss), the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income. | |||||||||||||
Tax positions are recognized when they are more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is more likely than not of being recognized upon settlement. We will be subject to periodic audits by the Internal Revenue Service and other state and local taxing authorities. Theses audits may challenge certain of the Company’s tax positions such as the timing and amount of income and deductions and the allocation of taxable income to various tax jurisdictions. We evaluate our tax positions and establish liabilities in accordance with the applicable guidance on uncertainty in income taxes. These tax uncertainties are reviewed as facts and circumstances change and are adjusted accordingly. This requires significant management judgment in estimating final outcomes. Actual results could materially differ from these estimates and could significantly affect the effective tax rate and cash flows in future years. Interest and penalties are classified as income tax expense in the Consolidated Statements of Operations. | |||||||||||||
Prior to the Separation, our taxable income was included in the consolidated federal, state and foreign income tax returns of Sears Holdings or its affiliates. Income taxes in these consolidated financial statements have been recognized on a separate return basis. Under a Tax Sharing Agreement between the Company and Sears Holdings entered into prior to the Separation (the "Tax Sharing Agreement"), Sears Holdings is responsible for any federal, state or foreign income tax liability relating to tax periods ending on or before the Separation and the Company is responsible for any federal, state or foreign tax liability relating to tax periods ending after the Separation. | |||||||||||||
Fair Value of Financial Instruments | |||||||||||||
We determine the fair value of financial instruments in accordance with standards pertaining to fair value measurements. Such standards define fair value and establish a framework for measuring fair value in GAAP. Under fair value measurement accounting standards, fair value is considered to be the exchange price in an orderly transaction between market participants to sell an asset or transfer a liability at the measurement date. We report the fair value of financial assets and liabilities based on the fair value hierarchy prescribed by accounting standards for fair value measurements, which prioritizes the inputs to valuation techniques used to measure fair value into three levels, as follows: | |||||||||||||
Level 1 inputs—unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. An active market for the asset or liability is one in which transactions for the asset or liability occurs with sufficient frequency and volume to provide ongoing pricing information. | |||||||||||||
Level 2 inputs—inputs other than quoted market prices included in Level 1 that are observable, either directly or indirectly, for the asset or liability. Level 2 inputs include, but are not limited to, quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted market prices that are observable for the asset or liability, such as interest rate curves and yield curves observable at commonly quoted intervals, volatilities, credit risk and default rates. | |||||||||||||
Level 3 inputs—unobservable inputs for the asset or liability. | |||||||||||||
Cash and cash equivalents (level 1), accounts and notes receivable, short-term debt (level 2), merchandise payables, and accrued expenses are reflected in the Consolidated Balance Sheets at cost, which approximates fair value due to the short-term nature of these instruments. For short-term debt, the variable interest rates are a significant input in our fair value assessments. The carrying value of long-term notes receivable approximates fair value. | |||||||||||||
We measure certain non-financial assets and liabilities, including long-lived assets, at fair value on a non-recurring basis. As disclosed in Note 5, the Company recorded a goodwill impairment charge during the third quarter of fiscal 2014. The Company utilized Level 3 inputs to measure the fair value of goodwill. | |||||||||||||
New Accounting Pronouncements | |||||||||||||
Consolidation | |||||||||||||
In February 2015, the Financial Accounting Standards Board ("FASB") issued an accounting standards update which revises the consolidation model. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership, affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, and provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. This update will be effective for the Company in the first quarter of 2015. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. | |||||||||||||
Extraordinary and Unusual Items | |||||||||||||
In January 2015, the FASB issued an accounting standards update which eliminates the concept of an extraordinary item. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. This update will be effective for the Company in the first quarter of 2015. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. | |||||||||||||
Presentation of Financial Statements - Going Concern | |||||||||||||
In August 2014, the FASB issued an accounting standards update which requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued. If substantial doubt exists, additional disclosures are required. This update will be effective for the Company in the fourth quarter of 2016. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. | |||||||||||||
Revenue from Contracts with Customers | |||||||||||||
In May 2014, the FASB issued an accounting standards update which replaces the current revenue recognition standards. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for the Company in the first quarter of 2017 and may be applied retrospectively for each period presented or as a cumulative-effect adjustment at the date of adoption. The Company is evaluating the effect of adopting this new standard and has not yet determined the method by which the standard will be adopted. | |||||||||||||
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity | |||||||||||||
In April 2014, the FASB issued an accounting standards update which modifies the requirements for disposals to qualify as discontinued operations and expands related disclosure requirements. The update will be effective for the Company in the first quarter of 2015, and early adoption of the update is permitted. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. | |||||||||||||
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists | |||||||||||||
In July 2013, the Financial Accounting Standards Board ("FASB") issued an accounting standards update which requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward that the entity intends to use and is available for settlement at the reporting date. The update was effective and adopted by the Company in the first quarter of 2014 and impacted the Company's disclosures, but otherwise did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. |
Accounts_and_Franchisee_Receiv
Accounts and Franchisee Receivables and Other Assets | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Receivables [Abstract] | |||||||||||||
ACCOUNTS AND FRANCHISEE RECEIVABLES AND OTHER ASSETS | ACCOUNTS AND FRANCHISEE RECEIVABLES AND OTHER ASSETS | ||||||||||||
Accounts and franchisee receivables and other assets consist of the following: | |||||||||||||
31-Jan-15 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Short-term franchisee receivables | $ | 6,169 | $ | 3,652 | $ | 9,821 | |||||||
Miscellaneous receivables | 6,316 | 2,540 | 8,856 | ||||||||||
Long-term franchisee receivables | 20,678 | 28,652 | 49,330 | ||||||||||
Other assets | 1,973 | 290 | 2,263 | ||||||||||
Provision for losses on short-term franchisee receivables (1) | (3,212 | ) | (9 | ) | (3,221 | ) | |||||||
Provision for losses on long-term franchisee receivables (1) | (8,068 | ) | (79 | ) | (8,147 | ) | |||||||
Total Accounts and franchisee receivables and other assets | $ | 23,856 | $ | 35,046 | $ | 58,902 | |||||||
1-Feb-14 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Short-term franchisee receivables | $ | 2,748 | $ | 1,844 | $ | 4,592 | |||||||
Miscellaneous receivables | 13,029 | 1,631 | 14,660 | ||||||||||
Long-term franchisee receivables | 21,207 | 16,409 | 37,616 | ||||||||||
Other assets | 2,662 | 212 | 2,874 | ||||||||||
Total Accounts and franchisee receivables and other assets | $ | 39,646 | $ | 20,096 | $ | 59,742 | |||||||
(1) The Company recognizes a provision for losses on franchisee receivables (which consist primarily of franchisee promissory notes) in an amount equal to estimated probable losses net of recoveries. The provision is based on an analysis of expected future write-offs, existing economic conditions, and an assessment of specific identifiable franchisee promissory notes and other franchisee receivables considered at risk or uncollectible. The expense associated with the provision for losses on franchisee receivables is recognized as selling, general, and administrative expense. Most of our franchisee promissory notes authorize us to deduct debt service from our commissions otherwise due and payable to the franchisees, and we routinely make those deductions to the extent of available commissions payable. We established the provision for losses on franchisee receivables in the third and fourth quarters of fiscal 2014 based on our receivable-by-receivable assessment during the year that some of the franchisee receivables were potentially uncollectible in future periods due to (a) declining results of operations of, or other adverse financial events with respect to, franchise stores that indicated that the franchisees might not be able to meet their debt-service and other obligations to us as they became due and (b) the refusal during the year of one of our franchisees to continue to operate its franchise stores in accordance with the franchisee's agreements with us. |
Provision_for_Losses_on_Franch
Provision for Losses on Franchisee Receivables | 12 Months Ended | ||||
Jan. 31, 2015 | |||||
Receivables [Abstract] | |||||
PROVISION FOR LOSSES ON FRANCHISEE RECEIVABLES | PROVISION FOR LOSSES ON FRANCHISEE RECEIVABLES | ||||
The provision for losses on Franchisee Receivables, which was established in fiscal 2014, consists of the following: | |||||
thousands | 31-Jan-15 | ||||
Provision for losses on franchisee receivables, beginning of period | $ | — | |||
Expense accruals during the period | 13,055 | ||||
Write off of franchisee receivables | (1,687 | ) | |||
Provision for losses on franchisee receivables, end of period | $ | 11,368 | |||
Other_Current_and_LongTerm_Lia
Other Current and Long-Term Liabilities | 12 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
Payables and Accruals [Abstract] | |||||||||
OTHER CURRENT AND LONG-TERM LIABILITIES | OTHER CURRENT AND LONG-TERM LIABILITIES | ||||||||
Other current and long-term liabilities consist of the following: | |||||||||
thousands | 31-Jan-15 | 1-Feb-14 | |||||||
Customer deposits | $ | 30,241 | $ | 35,547 | |||||
Sales and other taxes | 12,458 | 11,403 | |||||||
Accrued expenses | 16,265 | 9,523 | |||||||
Payroll and related items | 4,072 | 8,105 | |||||||
Total Other current and long-term liabilities | $ | 63,036 | $ | 64,578 | |||||
Goodwill
Goodwill | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||
Goodwill | GOODWILL | ||||||||||||
Goodwill allocated to our Hometown and Outlet segments as of January 31, 2015 and changes in the carrying amount of goodwill for the year ended January 31, 2015 are as follows: | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Balance (gross) at February 1, 2014 | $ | 167,000 | $ | — | $ | 167,000 | |||||||
Impairment Loss | (167,000 | ) | — | (167,000 | ) | ||||||||
Balance at January 31, 2015 | $ | — | $ | — | $ | — | |||||||
For fiscal year 2014, the $167 million decrease in goodwill is due entirely to the non-cash impairment loss with respect to the Hometown Reporting Unit as discussed further below. | |||||||||||||
We review the Hometown Stores and Home Appliance Showrooms ("Hometown Reporting Unit") goodwill for impairment annually at the beginning of the fourth fiscal quarter and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The goodwill impairment test involves a two-step process. In the first step, SHO compares the fair value of the Hometown Reporting Unit to its carrying value. If the fair value of the Hometown Reporting Unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the Hometown Reporting Unit is less than its carrying value, SHO must perform the second step of the impairment test to measure the amount of impairment loss. In the second step, the Hometown Reporting Unit's fair value is allocated to all of the assets and liabilities of the Hometown Reporting Unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the Hometown Reporting Unit were being acquired in a business combination. If the implied fair value of the Hometown Reporting Unit's goodwill is less than its carrying value, the difference is recorded as a non-cash impairment loss. | |||||||||||||
During the third quarter of fiscal 2014, we determined that sufficient indicators of potential impairment existed to require that we conduct an interim impairment analysis of the Hometown Reporting Unit's goodwill. These indicators included a significant and sustained decline in the recent trading values of SHO's stock, coupled with market conditions and business trends affecting the Hometown Reporting Unit. The primary operating factors were declines in revenue and profitability for fiscal 2014. Merchandise revenues in fiscal 2014 were impacted by the highly promotional environment, along with other factors that caused declines in comparable store sales and related profitability below expectations for the Hometown Reporting Unit. | |||||||||||||
SHO estimated the fair value of the Hometown Reporting Unit using a weighting of fair values derived from the income approach and the market approach. Under the income approach, SHO calculated the fair value of the Hometown Reporting Unit based on the present value of the Hometown Reporting Unit's estimated future cash flows. The cash flow projections were based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. SHO used a discount rate that was based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the Hometown Reporting Unit and its projected cash flows. SHO's market approach used estimated fair values based on market multiples of revenue and earnings derived from comparable publicly traded companies with operating and investment characteristics that were comparable to the operating and investment characteristics of the Hometown Reporting Unit. | |||||||||||||
Due to the complexity and the effort required to estimate the fair value of the Hometown Reporting Unit for the first step of the impairment test and to estimate the fair values of all assets and liabilities of the Hometown Reporting Unit for the second step of the impairment test, SHO used fair value estimates that were derived based on assumptions and analyses that are subject to judgment. SHO’s first-step evaluation concluded that the fair value of the Hometown Reporting Unit was substantially below its carrying value. Based on SHO's second-step analyses, the implied fair value of the Hometown Reporting Unit's goodwill was $0. As a result, a full impairment of goodwill was required and we recorded a $167.0 million non-cash goodwill impairment charge in the third quarter of fiscal 2014, which is reflected as "Impairment of goodwill" in the Consolidated Statements of Operations. The primary factor that contributed to the goodwill impairment loss was the aforementioned 2014 operating issues leading to less-optimistic forecasts for the remainder of fiscal 2014 and fiscal 2015 and the corresponding impact beyond those periods. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||||
Jan. 31, 2015 | |||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||
Income Taxes | INCOME TAXES | ||||||||||||||
In connection with the Separation, SHO and Sears Holdings entered into a Tax Sharing Agreement with Sears Holdings that governs the rights and obligations of the parties with respect to pre-Separation and post-Separation tax matters. Under the Tax Sharing Agreement, Sears Holdings is responsible for any federal, state or foreign income tax liability relating to tax periods ending on or before the Separation. For all periods after the Separation, the Company is responsible for any federal, state or foreign tax liability. Current income taxes payable for any federal, state or foreign income tax returns is reported in the period incurred. | |||||||||||||||
We account for uncertainties in income taxes according to accounting standards for uncertain tax positions. The Company is present in a large number of taxable jurisdictions and, at any point in time, can have audits underway at various stages of completion in one or more of these jurisdictions. We evaluate our tax positions and establish liabilities for uncertain tax positions that may be challenged by local authorities and may not be fully sustained, despite the belief that the underlying tax positions are fully supportable. Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, developments in case law, and closings of statutes of limitation. Such adjustments are reflected in the tax provision as appropriate. Pursuant to the Tax Sharing Agreement, Sears Holdings is responsible for any unrecognized tax liabilities or benefits through the date of the Separation and the Company is responsible for any uncertain tax positions after the Separation. For 2014, 2013 and 2012, no unrecognized tax benefits have been identified and reflected in the financial statements. All of our tax years remain open since the Separation. | |||||||||||||||
We classify interest expense and penalties related to unrecognized tax benefits and interest income on tax overpayments as components of income tax expense. As no unrecognized tax benefits have been identified and reflected in the consolidated financial statements, no interest or penalties related to unrecognized tax benefits are reflected in the consolidated balance sheets or statements of operations. | |||||||||||||||
As of January 28, 2012 the assets and liabilities of the Sears Hometown and Hardware and Sears Outlet businesses were owned by subsidiaries of Sears Holdings. On August 31, 2012, through a series of intercompany transactions Sears Holdings and several of its subsidiaries transferred the assets and liabilities comprising the Sears Hometown and Hardware and Sears Outlet businesses to SHO. In connection with the intercompany transactions, for tax purposes the transferred assets and liabilities were stepped up to their estimated fair market values as of August 31, 2012, but for financial statement purposes the book value of the assets and liabilities remained unchanged at their historical cost bases. This tax adjustment related to the Separation was accounted for as an equity contribution that increased net deferred tax assets by $80.4 million reflecting the stepped-up tax basis in excess of the book basis that occurred in connection with the intercompany transactions described above, primarily for merchandise inventories, favorable leases, fixed assets, and royalty-free licenses to use the "Sears" name. | |||||||||||||||
The provisions for income tax expense for 2014, 2013 and 2012 consist of the following: | |||||||||||||||
Fiscal Year Ended | |||||||||||||||
thousands | 2014 | 2013 | 2012 | ||||||||||||
Income (loss) before income taxes: | |||||||||||||||
U.S. | $ | (172,829 | ) | $ | 58,713 | $ | 95,966 | ||||||||
Foreign | 958 | 1,170 | 4,014 | ||||||||||||
Total | $ | (171,871 | ) | $ | 59,883 | $ | 99,980 | ||||||||
Income tax expense (benefit): | |||||||||||||||
Current: | |||||||||||||||
Federal | $ | 2,872 | $ | 3,808 | $ | 33,469 | |||||||||
State | 608 | 1,341 | 6,848 | ||||||||||||
Foreign | 584 | 570 | 1,224 | ||||||||||||
Total | 4,064 | 5,719 | 41,541 | ||||||||||||
Deferred: | |||||||||||||||
Federal | (6,037 | ) | 15,859 | (2,226 | ) | ||||||||||
State | (1,093 | ) | 2,847 | 585 | |||||||||||
Foreign | — | (92 | ) | — | |||||||||||
Total | (7,130 | ) | 18,614 | (1,641 | ) | ||||||||||
Income tax provision | $ | (3,066 | ) | $ | 24,333 | $ | 39,900 | ||||||||
The provisions for income taxes for financial reporting purposes is different from the tax provision computed by applying the statutory federal tax rate. The reconciliation of the tax rate follows: | |||||||||||||||
Fiscal Year Ended | |||||||||||||||
2014 | 2013 | 2012 | |||||||||||||
Federal tax rate | 35 | % | 35 | % | 35 | % | |||||||||
State income tax (net of federal benefit) | 0.2 | % | 4.5 | % | 4.9 | % | |||||||||
Goodwill | (34.0 | )% | — | % | — | % | |||||||||
Other | 0.6 | % | 1.1 | % | — | % | |||||||||
Effective tax rate | 1.8 | % | 40.6 | % | 39.9 | % | |||||||||
The major components of the deferred tax assets and liabilities as of January 31, 2015 and February 1, 2014 are as follows: | |||||||||||||||
Fiscal Year Ended | |||||||||||||||
thousands | 31-Jan-15 | 1-Feb-14 | |||||||||||||
Deferred tax assets | |||||||||||||||
Bad Debts | $ | 4,412 | $ | — | |||||||||||
Capital Leases | 17 | 183 | |||||||||||||
Deferred Compensation | 548 | 2,030 | |||||||||||||
Deferred Rent | 2,180 | 1,856 | |||||||||||||
Favorable Leases | 105 | 1,155 | |||||||||||||
Inventory | 1,579 | — | |||||||||||||
Property Taxes | 1,108 | 608 | |||||||||||||
Royalty-free License | 53,023 | 57,131 | |||||||||||||
Store Closing Reserve | — | 149 | |||||||||||||
Other | 4,871 | 2,539 | |||||||||||||
Total deferred tax assets | $ | 67,843 | $ | 65,651 | |||||||||||
Deferred tax liabilities | |||||||||||||||
Inventory | — | (5,098 | ) | ||||||||||||
Property | (1,936 | ) | (1,865 | ) | |||||||||||
Other | (751 | ) | (661 | ) | |||||||||||
Total deferred tax liabilities | (2,687 | ) | (7,624 | ) | |||||||||||
Net deferred tax assets | $ | 65,156 | $ | 58,027 | |||||||||||
We account for income taxes in accordance with accounting standards for such taxes, which require that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the financial reporting and tax bases of recorded assets and liabilities. Accounting standards also require that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion of or all of the deferred tax assets will not be realized. | |||||||||||||||
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of negative evidence evaluated concerned the estimated future foreign taxable income available to use the foreign tax credit carryforward deferred tax asset of $0.3 million. On the basis of this analysis, for the years ended January 31, 2015 and February 1, 2014, a valuation allowance of $0.1 million and $0.3 million, respectively, was added through tax expense to reduce this deferred tax asset since it does not meet the more likely than not standard for realization. For the year ended January 31, 2015, the valuation allowance was reduced by $0.2 million due to changes in Puerto Rican law. We will continue to evaluate our valuation allowance in future years for any change in circumstances that causes a change in judgment about the realization of the deferred tax asset. |
Related_Party_Agreements_and_T
Related Party Agreements and Transactions | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Related Party Transactions [Abstract] | |||||||||||||
RELATED-PARTY AGREEMENTS AND TRANSACTIONS | RELATED-PARTY AGREEMENTS AND TRANSACTIONS | ||||||||||||
According to publicly available information, ESL beneficially owns approximately 47% of our outstanding shares of common stock and approximately 53% of Sears Holdings' outstanding shares of common stock. | |||||||||||||
We are party to various agreements with Sears Holdings which, among other things, (1) govern specified aspects of our relationship with Sears Holdings, (2) establish terms under which subsidiaries of Sears Holdings are providing services to us, and (3) establish terms pursuant to which subsidiaries of Sears Holdings are obtaining merchandise inventories for us. The terms of these agreements were agreed to prior to the Separation in the context of a parent-subsidiary relationship and in the overall context of the Separation. | |||||||||||||
The following is a summary of the nature of the related-party transactions between SHO and Sears Holdings: | |||||||||||||
• | We are party to a Separation Agreement with Sears Holdings pursuant to which Sears Holdings consummated the Separation. The Separation Agreement, among other things, provided for the allocation and transfer, through a series of intercompany transactions, of the assets and the liabilities comprising the Sears Hometown and Hardware and Sears Outlet businesses of Sears Holdings. In the Separation Agreement SHO and Sears Holdings agree to release each other from all pre-separation claims (other than with respect to the agreements executed in connection with the Separation) and each agrees to defend and indemnify the other with respect to its post-separation business. | ||||||||||||
• | We obtain a significant amount of our merchandise inventories from Sears Holdings. This enables us to take advantage of the amount and scope of Sears Holdings purchasing activities. We are party to a Merchandising Agreement with Sears Holdings, Kmart and SRC (the "Merchandising Agreement") pursuant to which Kmart and SRC (1) sell to us, with respect to certain specified product categories, Sears-branded products including KCD Products and vendor-branded products obtained from Kmart’s and SRC’s vendors and suppliers and (2) grant us licenses to use the trademarks owned by Kmart, SRC or other subsidiaries of Sears Holdings, or the "Sears marks," including the KCD Marks in connection with the marketing and sale of products sold under the Sears marks. The initial term of the Merchandising Agreement will expire in April 2018, subject to two three-year renewal terms with respect to the KCD Products. We pay, on a weekly basis, a royalty determined by multiplying our net sales of the KCD Products by specified fixed royalties rates for each brand’s licensed products, subject to adjustments based on the extent to which we feature Kenmore brand products in certain of our advertising and the extent to which we pay specified minimum commissions to our franchisees and Hometown Store owners. We are also party to agreements with Sears Holdings for related logistics, handling, warehouse and transportation services, the charges for which are based generally on merchandise inventory units. We also pay fees for participation in Sears Holdings' SYW program. | ||||||||||||
• | We obtain our merchandise from Sears Holdings and other vendors. For the year ended January 31, 2015, products which we acquired from Sears Holdings, including KCD Products and other products, accounted for approximately 84% of our total purchases of inventory from all vendors with a comparable level of purchases from Sears Holdings in 2013 and 2012. The loss of or a reduction in the amount of merchandise made available to us by Sears Holdings could have a material adverse effect on our business and results of operations. | ||||||||||||
• | Sears Holdings provides the Company with specified corporate services. These services include tax, accounting, procurement, risk management and insurance, advertising and marketing, human resources, loss prevention, environmental, product and human safety, facilities, logistics and distribution, information technology (including the point-of-sale system used by the Company and its dealers and franchisees), online, payment clearing, and other financial, real estate management, merchandise-related and other support services. Sears Holdings charges the Company for these corporate services generally based on actual usage, a pro rata charge based upon sales, head count, or square footage, or a fixed fee or commission as agreed between the parties. | ||||||||||||
• | Sears Holdings has licensed the Company until October 11, 2029, on a royalty-free basis, to use under specified conditions (1) the name "Sears" in our corporate name and to promote our businesses and (2) the www.searsoutlet.com, www.searshomeapplianceshowroom.com, www.searshometownstores.com, and www.searshardwarestores.com domain names to promote our businesses. Also, Sears Holdings has licensed the Company until October 11, 2029, on an exclusive, royalty-free basis, under specified conditions to use for the purpose of operating our stores the names "Sears Appliance & Hardware," "Sears Authorized Hometown Stores," "Sears Hometown Store," "Sears Home Appliance Showroom," "Sears Hardware," and "Sears Outlet Store." | ||||||||||||
• | Sears Holdings has assigned to us leases for, or has subleased to us, many of the stores that we operate or that we have, in turn, subleased to franchisees. Generally, the terms of the subleases match the terms, including the payment of rent and expiration date, of the existing leases between Sears Holdings (or one of its subsidiaries) and the landlord. In addition, a small number of our stores are in locations where Sears Holdings currently operates one of its stores or a distribution facility. In such cases we have entered into a lease or sublease with Sears Holdings (or one of its subsidiaries) for the portion of the space in which our store will operate, and we pay rent directly to Sears Holdings on the terms negotiated in connection with the Separation. We also lease from Sears Holdings office space for our corporate headquarters. | ||||||||||||
• | SHO receives commissions from Sears Holdings for specified sales of merchandise made through www.sears.com and www.searsoutlet.com, the sale of extended-service plans, delivery and handling services and relating to the use in our stores of credit cards branded with the Sears name. For certain transactions SHO pays a commission to Sears Holdings. | ||||||||||||
These agreements may be terminated by either party upon a material breach if the breaching party fails to cure such breach within 30 days following written notice of such breach or, if such breach is not curable, immediately upon delivery of notice of the non-breaching party’s intention to terminate. | |||||||||||||
The following table summarizes the transactions with Sears Holdings included in the Company’s Consolidated Financial Statements: | |||||||||||||
Fiscal Year Ended | |||||||||||||
January 31, | February 1, | February 2, | |||||||||||
thousands | 2015 | 2014 | 2013 | ||||||||||
Net Commissions from Sears Holdings Corporation | $ | 99,054 | $ | 90,085 | $ | 83,756 | |||||||
Purchases related to cost of sales and occupancy (1) | 1,499,231 | 1,597,716 | 1,608,741 | ||||||||||
Services included in selling and administrative (1) | 96,027 | 115,740 | 84,003 | ||||||||||
-1 | We reduced the amounts previously presented for fiscal years 2013 and 2012 by $93.6 million and $65.1 million, respectively, in "Purchases related to cost of sales and occupancy" and have reclassified the amounts into "Services." The reclassified items were primarily costs associated with marketing. | ||||||||||||
In 2012 Services were $84.0 million which consisted of allocations of $54.3 million of shared services costs pre-Separation and charges of $29.7 million of shared services costs post-Separation. | |||||||||||||
Following the Separation we incur payables to Sears Holdings for merchandise inventory purchases and service and occupancy charges (net of commissions) based on our Separation agreements. Amounts due to or from Sears Holding are non-interest bearing, settled on a net basis, and have payments terms of 10 days after the invoice date. Prior to the Separation these amounts were recorded and settled through intercompany transfers to Sears Holdings. |
Financing_Arrangements
Financing Arrangements | 12 Months Ended |
Jan. 31, 2015 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | FINANCING ARRANGEMENT |
In October 2012 the Company entered into a Credit Agreement with a syndicate of lenders, including Bank of America, N.A., as administrative agent, which provides (subject to availability under a borrowing base) for aggregate maximum borrowings of $250 million (the "Senior ABL Facility"). Under the Senior ABL Facility the Company initially borrowed $100 million which was used to pay a cash dividend to Sears Holdings prior to the Separation. As of January 31, 2015 we had $84.1 million outstanding under the Senior ABL Facility, which approximated the fair value of these borrowings. The Senior ABL Facility provides (subject to availability under a borrowing base) for maximum borrowings up to the aggregate commitments of all of the lenders, which as of January 31, 2015 totaled $250 million. Up to $75 million of the Senior ABL Facility is available for the issuance of letters of credit and up to $25 million is available for swingline loans. The Senior ABL Facility permits us to request commitment increases in an aggregate principal amount of up to $100 million. Availability under the Senior ABL Facility as of January 31, 2015 was $157.9 million, with $5.6 million of letters of credit outstanding under the facility. | |
The principal terms of the Senior ABL Facility are summarized below. | |
Senior ABL Facility | |
Maturity; Amortization and Prepayments | |
The Senior ABL Facility will mature on the earlier of (i) October 11, 2017 or (ii) six months prior to the expiration of the Merchandising Agreement and the other agreements with Sears Holdings or its subsidiaries in connection with the Separation that are specified in the Senior ABL Facility, unless such agreements have been extended to a date later than October 11, 2017 or terminated on a basis reasonably satisfactory to the administrative agent under the Senior ABL Facility. | |
The Senior ABL Facility is subject to mandatory prepayment in amounts equal to the amount by which the outstanding extensions of credit exceed the lesser of the borrowing base and the commitments then in effect. | |
Guarantees; Security | |
The obligations under the Senior ABL Facility are guaranteed by us and each of our existing and future direct and indirect wholly owned domestic subsidiaries (subject to certain exceptions). The Senior ABL Facility and the guarantees thereunder are secured by a first priority security interest in certain assets of the borrowers and guarantors consisting primarily of accounts receivable, inventory, cash, cash equivalents, deposit accounts and securities accounts, as well as certain other assets (other than intellectual property) ancillary to the foregoing and all proceeds of all of the foregoing, including cash proceeds and the proceeds of applicable insurance. | |
Interest; Fees | |
The interest rates per annum applicable to the loans under the Senior ABL Facility are based on a fluctuating rate of interest measured by reference to, at our election, either (1) an adjusted London inter-bank offered rate (LIBOR) plus a borrowing margin, which rate was approximately 2.16% at January 31, 2015 or (2) an alternate base rate plus a borrowing margin, with the borrowing margin subject to adjustment based on the average excess availability under the Senior ABL Facility for the preceding fiscal quarter, which rate was approximately 4.25% at January 31, 2015. | |
Customary fees are payable in respect of the Senior ABL Facility, including letter of credit fees and commitment fees. | |
Covenants | |
The Senior ABL Facility includes a number of covenants that, among other things, limit or restrict our ability to, subject to specified exceptions, incur additional indebtedness (including guarantees), grant liens, make investments, make prepayments on other indebtedness, engage in mergers, or change the nature of our business. | |
The Senior ABL Facility limits SHO's ability to declare and pay cash dividends and repurchase its common stock. SHO may declare and pay cash dividends to its stockholders and may repurchase stock if the following conditions are satisfied: either (a) (i) no specified default then exists or would arise as a result of the declaration or payment of the cash dividend or as a result of the stock repurchase, (ii) SHO and its subsidiaries that are also borrowers have demonstrated to the reasonable satisfaction of the agent for the lenders that monthly availability (as determined in accordance with the Senior ABL Facility), immediately following the declaration and payment of the cash dividend or the stock repurchase and as projected on a pro forma basis for the twelve months following and after giving effect to the declaration and payment of the cash dividend or the stock repurchase, would be at least equal to the greater of (x) 25% of the Loan Cap (which is the lesser of (A) the aggregate commitments of the lenders and (B) the borrowing base) and (y) $50,000,000, and (iii) after giving pro forma effect to the declaration and payment of the cash dividend or the stock repurchase as if it constituted a specified debt service charge, the specified consolidated fixed charge coverage ratio, as calculated on a trailing twelve months basis, would be equal to or greater than 1.1:1.0, or (b) (i) no specified default then exists or would arise as a result of the declaration or payment of the cash dividend or the stock repurchase, (ii) payment of the cash dividend or the stock repurchase is not made with the proceeds of any credit extension under the Senior ABL Facility, (iii) during the 120-day period prior to declaration and payment of the cash dividend or the stock repurchase, no credit extension was outstanding under the Senior ABL Facility, and (iv) SHO demonstrates to the reasonable satisfaction of the agent for the lenders that, on a pro forma and projected basis, no credit extensions would be outstanding under the Senior ABL Facility for the 120-day period following the declaration and payment of the cash dividend or the stock repurchase. No default or event of default presently exists. At January 31, 2015 we did not meet either of the foregoing conditions and as a result the Senior ABL Facility does not permit us to pay cash dividends or repurchase our common stock. | |
The Senior ABL Facility also contains certain affirmative covenants, including financial and other reporting requirements. | |
Events of Default | |
The Senior ABL Facility includes customary and other events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests, material judgments, change of control, failure to perform a "Material Contract" (which includes the Merchandising Agreement and other SHO-Sears Holdings Agreements) to the extent required to maintain it in full force and effect, the failure to enforce a Material Contract in accordance with its terms, or Sears Holdings terminates the "Separation Agreements" (which include, among other SHO-Sears Holdings Agreements, the Merchandising Agreement and the Services Agreements). |
Summary_of_Segment_Data
Summary of Segment Data | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Segment Reporting [Abstract] | |||||||||||||
SUMMARY OF SEGMENT DATA | SUMMARY OF SEGMENT DATA | ||||||||||||
The Hometown reportable segment consists of the aggregation of our Hometown Stores, Hardware Stores and Home Appliance Showroom formats. The Outlet reportable segment also represents a business format. These segments are evaluated by our Chief Operating Decision Maker to make decisions about resource allocation and to assess performance. Each of these segments derives its revenues from the sale of merchandise and related services to customers, primarily in the United States. The Net Sales categories include appliances, lawn and garden, tools and paint and other. The other category includes initial franchise revenue of $0.3 million, $5.5 million and $11.2 million from Hometown in 2014, 2013 and 2012, respectively, and $16.6 million and $20.1 million from Outlet in 2014 and 2013 respectively. Initial franchise revenues consist of franchise fees paid with respect to new and existing Company-operated stores that we transfer to franchisees plus the net gain or loss on any related transfer of assets to the franchisees. | |||||||||||||
2014 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Net sales | |||||||||||||
Appliances | $ | 1,056,114 | $ | 522,247 | $ | 1,578,361 | |||||||
Lawn and garden | 316,725 | 22,297 | 339,022 | ||||||||||
Tools and paint | 204,117 | 18,471 | 222,588 | ||||||||||
Other | 115,421 | 100,641 | 216,062 | ||||||||||
Total | 1,692,377 | 663,656 | 2,356,033 | ||||||||||
Costs and expenses | |||||||||||||
Cost of sales and occupancy | 1,297,212 | 506,285 | 1,803,497 | ||||||||||
Selling and administrative | 403,367 | 143,269 | 546,636 | ||||||||||
Impairment of goodwill | 167,000 | — | 167,000 | ||||||||||
Depreciation | 3,817 | 6,355 | 10,172 | ||||||||||
Gain on the sale of assets | (113 | ) | — | (113 | ) | ||||||||
Total | 1,871,283 | 655,909 | 2,527,192 | ||||||||||
Operating income (loss) | $ | (178,906 | ) | $ | 7,747 | $ | (171,159 | ) | |||||
Total assets | $ | 430,128 | $ | 215,594 | $ | 645,722 | |||||||
Capital expenditures | $ | 3,046 | $ | 9,803 | $ | 12,849 | |||||||
2013 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Net sales | |||||||||||||
Appliances | $ | 1,160,894 | $ | 478,435 | $ | 1,639,329 | |||||||
Lawn and garden | 319,725 | 23,743 | 343,468 | ||||||||||
Tools and paint | 213,575 | 14,674 | 228,249 | ||||||||||
Other | 117,325 | 93,191 | 210,516 | ||||||||||
Total | 1,811,519 | 610,043 | 2,421,562 | ||||||||||
Costs and expenses | |||||||||||||
Cost of sales and occupancy | 1,389,627 | 453,791 | 1,843,418 | ||||||||||
Selling and administrative | 396,073 | 110,557 | 506,630 | ||||||||||
Depreciation | 6,321 | 5,685 | 12,006 | ||||||||||
Gain on the sale of assets | — | (1,567 | ) | (1,567 | ) | ||||||||
Total | 1,792,021 | 568,466 | 2,360,487 | ||||||||||
Operating income | $ | 19,498 | $ | 41,577 | $ | 61,075 | |||||||
Total assets | $ | 632,437 | $ | 214,748 | $ | 847,185 | |||||||
Capital expenditures | $ | 3,731 | $ | 6,973 | $ | 10,704 | |||||||
2012 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Net sales | |||||||||||||
Appliances | $ | 1,151,356 | $ | 452,201 | $ | 1,603,557 | |||||||
Lawn and garden | 343,575 | 19,034 | 362,609 | ||||||||||
Tools and paint | 234,457 | 15,859 | 250,316 | ||||||||||
Other | 159,875 | 77,249 | 237,124 | ||||||||||
Total | 1,889,263 | 564,343 | 2,453,606 | ||||||||||
Costs and expenses | |||||||||||||
Cost of sales and occupancy | 1,433,880 | 406,327 | 1,840,207 | ||||||||||
Selling and administrative | 394,335 | 110,065 | 504,400 | ||||||||||
Depreciation | 3,658 | 5,816 | 9,474 | ||||||||||
Total | 1,831,873 | 522,208 | 2,354,081 | ||||||||||
Operating income | $ | 57,390 | $ | 42,135 | $ | 99,525 | |||||||
Total assets | $ | 633,060 | $ | 152,743 | $ | 785,803 | |||||||
Capital expenditures | $ | 3,338 | $ | 4,772 | $ | 8,110 | |||||||
Quarterly_Financial_Data
Quarterly Financial Data | 12 Months Ended | ||||||||||||||||
Jan. 31, 2015 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
QUARTERLY FINANCIAL DATA | QUARTERLY FINANCIAL DATA (UNAUDITED) | ||||||||||||||||
The following tables reflect the unaudited quarterly consolidated statements of operations for the periods indicated. | |||||||||||||||||
Fiscal Year Ended January 31, 2015 | |||||||||||||||||
thousands, except per share amounts | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
NET SALES | $ | 589,854 | $ | 638,693 | $ | 565,147 | $ | 562,339 | |||||||||
COSTS AND EXPENSES | |||||||||||||||||
Cost of sales and occupancy | 445,955 | 491,604 | 430,085 | 435,853 | |||||||||||||
Selling and administrative | 135,279 | 139,226 | 139,766 | 132,365 | |||||||||||||
Impairment of goodwill | — | — | 167,000 | — | |||||||||||||
Depreciation | 2,288 | 2,067 | 2,035 | 3,782 | |||||||||||||
Loss (gain) on the sale of assets | — | — | (155 | ) | 42 | ||||||||||||
Total costs and expenses | 583,522 | 632,897 | 738,731 | 572,042 | |||||||||||||
Operating income (loss) | 6,332 | 5,796 | (173,584 | ) | (9,703 | ) | |||||||||||
Interest expense | (934 | ) | (905 | ) | (915 | ) | (1,107 | ) | |||||||||
Other income | 680 | 798 | 888 | 783 | |||||||||||||
Income (loss) before income taxes | 6,078 | 5,689 | (173,611 | ) | (10,027 | ) | |||||||||||
Income tax benefit (expense) | (2,399 | ) | (2,329 | ) | 2,401 | 5,393 | |||||||||||
NET INCOME (LOSS) | $ | 3,679 | $ | 3,360 | $ | (171,210 | ) | $ | (4,634 | ) | |||||||
NET INCOME (LOSS) PER COMMON SHARE | |||||||||||||||||
ATTRIBUTABLE TO STOCKHOLDERS | |||||||||||||||||
Basic: | $ | 0.16 | $ | 0.15 | $ | (7.55 | ) | $ | (0.20 | ) | |||||||
Diluted: | $ | 0.16 | $ | 0.15 | $ | (7.55 | ) | $ | (0.20 | ) | |||||||
Basic weighted average common shares outstanding | 22,666 | 22,666 | 22,666 | 22,666 | |||||||||||||
Diluted weighted average common shares outstanding | 22,666 | 22,666 | 22,666 | 22,666 | |||||||||||||
Fiscal Year Ended February 1, 2014 | |||||||||||||||||
thousands, except per share amounts | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
NET SALES | $601,117 | $656,899 | $561,068 | $602,478 | |||||||||||||
COSTS AND EXPENSES | |||||||||||||||||
Cost of sales and occupancy | 446,869 | 508,502 | 425,596 | 462,451 | |||||||||||||
Selling and administrative | 127,188 | 130,928 | 121,698 | 126,816 | |||||||||||||
Depreciation | 2,341 | 2,050 | 2,177 | 5,438 | |||||||||||||
Gain on the sale of assets | — | — | (1,567 | ) | — | ||||||||||||
Total costs and expenses | 576,398 | 641,480 | 547,904 | 594,705 | |||||||||||||
Operating income | 24,719 | 15,419 | 13,164 | 7,773 | |||||||||||||
Interest income (expense) | (589 | ) | (642 | ) | (738 | ) | (1,077 | ) | |||||||||
Other income | 415 | 431 | 460 | 548 | |||||||||||||
Income before income taxes | 24,545 | 15,208 | 12,886 | 7,244 | |||||||||||||
Income tax expense | (9,548 | ) | (6,073 | ) | (5,191 | ) | (3,521 | ) | |||||||||
NET INCOME | $ | 14,997 | $ | 9,135 | $ | 7,695 | $ | 3,723 | |||||||||
NET INCOME PER COMMON SHARE | |||||||||||||||||
ATTRIBUTABLE TO STOCKHOLDERS | |||||||||||||||||
Basic: | $0.65 | $0.40 | $0.33 | $0.16 | |||||||||||||
Diluted: | $0.65 | $0.40 | $0.33 | $0.16 | |||||||||||||
Basic weighted average common shares outstanding | 23,100 | 23,100 | 22,999 | 22,729 | |||||||||||||
Diluted weighted average common shares outstanding | 23,100 | 23,106 | 22,999 | 22,729 | |||||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended |
Jan. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES |
We are subject to various legal and governmental proceedings arising out of the ordinary course of business, the outcome of which, individually or in the aggregate, in the opinion of management, would not have a material adverse effect on our business, financial position, or results of operations or cash flows. |
Income_loss_per_Common_Share
Income (loss) per Common Share | 12 Months Ended | |||||||||||
Jan. 31, 2015 | ||||||||||||
Earnings Per Share [Abstract] | ||||||||||||
INCOME (LOSS) PER COMMON SHARE | INCOME (LOSS) PER COMMON SHARE | |||||||||||
Basic income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for each period. Diluted income per common share also includes the dilutive effect of potential common shares. In connection with the Separation, stockholders purchased from Sears Holdings a total of 23.1 million shares of our common stock upon the exercise of subscription rights distributed to Sears Holdings' stockholders. This share amount has been utilized for the calculation of basic and diluted income (loss) per share for all periods prior to the Separation. | ||||||||||||
The following table sets forth the components used to calculate basic and diluted income (loss) per common share attributable to our stockholders. | ||||||||||||
Fiscal Year Ended | ||||||||||||
January 31, 2015 | February 1, 2014 | February 2, 2013 | ||||||||||
thousands except income per common share | ||||||||||||
Basic weighted average shares | 22,666 | 22,984 | 23,100 | |||||||||
Dilutive effect of restricted stock | — | 5 | — | |||||||||
Diluted weighted average shares | 22,666 | 22,989 | 23,100 | |||||||||
Net income (loss) | $ | (168,805 | ) | $ | 35,550 | $ | 60,080 | |||||
Income (loss) per common share: | ||||||||||||
Basic | $ | (7.45 | ) | $ | 1.55 | $ | 2.6 | |||||
Diluted | $ | (7.45 | ) | $ | 1.55 | $ | 2.6 | |||||
Equity
Equity | 12 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
EQUITY | EQUITY | |||||||
Stock-based Compensation | ||||||||
Four million shares of the Company's common stock are reserved for issuance under the Sears Hometown and Outlet Stores, Inc. Amended and Restated 2012 Stock Plan (the "Stock Plan"). In the second quarter of 2013 the Company granted a total of 89,221 shares of restricted stock, with a grant date fair value of $3.9 million, under the Stock Plan to a group of eligible individuals (as defined in the Stock Plan), all of whom were employees of the Company at the time of the grant. We are also authorized to grant stock options and to make other awards to eligible plan participants pursuant to the Stock Plan. Except for the 89,221 shares of restricted stock, the Company has made no stock-option or other grants or awards under the plan. Of the original grant of 89,221 shares of restricted stock, 18,974 shares have been forfeited. | ||||||||
We account for stock-based compensation using the fair value method in accordance with accounting standards regarding share-based payment transactions. During 2014 and 2013 we recorded $0.9 million in total compensation expense related to the 70,247 shares of restricted stock (none of which had vested). At January 31, 2015, we had $1.3 million in total unrecognized compensation cost, which we expect to recognize over approximately the next 1.25 years. | ||||||||
The 70,247 shares of restricted stock will vest, if at all, on May 16, 2016 in accordance with, and subject to the terms and conditions of, restricted stock agreements governing the awards, including forfeiture conditions, and the Stock Plan. The fair value of these awards is equal to the market price of our common stock on the date of grant. We do not currently have a broad-based program that provides for restricted stock awards on an annual basis. Changes in restricted stock awards for 2014 were as follows: | ||||||||
52 Weeks Ended January 31, 2015 | ||||||||
(Shares in thousands) | Shares | Weighted-Average Fair Value on Date of Grant | ||||||
Beginning of year balance | 87 | $ | 44.45 | |||||
Granted | — | — | ||||||
Vested | — | — | ||||||
Forfeited | (17 | ) | 44.45 | |||||
Balance at 1/31/2015 | 70 | $ | 44.45 | |||||
Share Repurchase Program | ||||||||
On August 28, 2013 the Company's Board of Directors authorized a $25 million repurchase program for the Company's outstanding shares of common stock. The timing and amount of repurchases depend on various factors, including market conditions, the Company's capital position and internal cash generation, and other factors. The Company's repurchase program does not include specific price targets, may be executed through open-market, privately negotiated, and other transactions that may be available, and may include utilization of Rule 10b5-1 plans. The repurchase program does not obligate the Company to repurchase any dollar amount, or any number of shares, of common stock. The repurchase program does not have a termination date, and the Company may suspend or terminate the repurchase program at any time. Shares that are repurchased by the Company pursuant to the repurchase program are retired and resume the status of authorized and unissued shares of common stock. During the third quarter of 2013 the Company adopted a Rule 10b5-1 plan that terminated on December 6, 2013. At January 31, 2015 the Senior ABL Facility prohibited cash dividends and the repurchase of our common stock. | ||||||||
No shares were repurchased during the 2014 fiscal year. During the 2013 fiscal year we repurchased 434,398 shares of our common stock at a total cost of $12.5 million. Our repurchases for the fiscal year ended February 1, 2014 were made at an average price of $28.83. We account for the repurchased and retired shares by reducing par value and capital in excess of par value up to the per share amount recorded in connection with the Separation, with the excess repurchase price recorded as a reduction to retained earnings. At January 31, 2015 we had $12.5 million of remaining authorization under the repurchase program. |
Defined_Contribution_Plan
Defined Contribution Plan | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||
DEFINED CONTRIBUTION PLAN | DEFINED CONTRIBUTION PLAN | ||||||||||||
We sponsor a Sears Hometown and Outlet Stores, Inc. 401(k) savings plan for employees meeting service-eligibility requirements. The Company offers a discretionary match contribution. The expense related to the savings plan has been determined in accordance with U.S. GAAP and the Company accrues the cost of these benefits during the years that employees render service. | |||||||||||||
Expenses for the retirement savings plan were as follows: | |||||||||||||
thousands | 2014 | 2013 | 2012 | ||||||||||
401(k) Savings Plan | $ | 1,137 | $ | 289 | $ | — | |||||||
Background_and_Basis_of_Presen1
Background, and Basis of Presentation and Significant Accounting Policies (Policies) | 12 Months Ended |
Jan. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Separation | Description of the Separation |
On October 11, 2012, Sears Holdings Corporation ("Sears Holdings") completed the separation of its Sears Hometown and Hardware and Sears Outlet businesses (the "Separation"). As part of the Separation, in August 2012 through a series of intercompany transactions Sears Holdings and several of its subsidiaries transferred the assets and liabilities comprising the Sears Hometown and Hardware and Sears Outlet businesses to SHO, which was formed in April 2012 as a wholly owned subsidiary of Sears Holdings. Effective upon the Separation, Sears Holdings ceased to own shares of our common stock, and thereafter our common stock began trading on the NASDAQ Stock Market under the trading symbol "SHOS." | |
As part of the Separation, Sears Holdings contributed to SHO equity intercompany balances due to/from Sears Holdings, which included amounts arising from pre-Separation purchases of merchandise inventories and which are included in Divisional Equity. After the Separation, the Company continues to purchase most of its merchandise from Sears Holdings and amounts payable to Sears Holdings are reflected separately on the consolidated balance sheet. | |
Basis of Presentation | Basis of Presentation |
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. | |
Prior to the Separation, the financial statements represented the Hometown and Hardware and Outlet businesses of Sears Holdings and with respect to all periods prior to the Separation were derived from the consolidated financial statements and accounting records of Sears Holdings, principally representing the historical results of operations and the historical basis of assets and liabilities of the Company's business. As pre-Separation business operations of Sears Holdings, we did not maintain our own legal, tax, and certain other corporate support functions. In connection with the Separation, Sears Holdings and SHO entered into services agreements to provide SHO with certain support services under the terms described in Note 7. The costs and allocations charged to the Company by Sears Holdings do not necessarily reflect the costs of obtaining the services from unaffiliated third parties or of the Company providing the applicable services itself. The consolidated financial statements contained herein, as they reflect information from 2012, may not be indicative of (1) the Company’s financial position, operating results, and cash flows in the future or (2) what the Company’s financial position, operating results, and cash flows would have been if the Hometown and Hardware and Outlet businesses of Sears Holdings had been a combined stand-alone business during all periods prior to the Separation. | |
We operate through two segments--our Sears Hometown and Hardware segment ("Hometown") and our Sears Outlet segment ("Outlet"). | |
Income Per Common Share | |
In connection with the Separation, holders of subscription rights that had been distributed to Sears Holdings' stockholders purchased from Sears Holdings a total of 23.1 million shares of our common stock. This share amount has been utilized for the calculation of basic and diluted income per share for all periods prior to the Separation. For the share amount for any time period post-Separation, we utilized the weighted-average common stock outstanding during the period. Dilutive income per share includes the dilutive effect of potential common shares. | |
Fiscal Year | Fiscal Year |
Our fiscal years end on the Saturday closest to January 31. Unless otherwise stated, references to specific years in these notes are to fiscal years. | |
Variable Interest Entities and Consolidation | Variable Interest Entities and Consolidation |
The Financial Accounting Standards Board ("FASB") has issued guidance on variable interest entities and consolidation for determining whether an entity is a variable interest entity as well as the methods permitted for determining the primary beneficiary of a variable interest entity. In addition, this guidance requires ongoing reassessments of whether a company is the primary beneficiary of a variable interest entity and disclosures related to a company’s involvement with a variable interest entity. | |
On an ongoing basis the Company evaluates its business relationships, such as those with its dealers, franchisees, and suppliers, to identify potential variable interest entities. Generally, these businesses qualify for a scope exception under the consolidation guidance, or, where a variable interest exists, the Company does not possess the power to direct the activities that most significantly impact the economic performance of these businesses. The Company has not consolidated any of such entities in the periods presented. | |
Use of Estimates | Use of Estimates |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events. The estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances. Adjustments to estimates and assumptions are made when facts and circumstances dictate. As future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying consolidated financial statements. Significant estimates and assumptions are required as part of determining inventory and accounts and franchisee receivables valuation, estimating depreciation and recoverability of long-lived assets, establishing insurance, warranty, legal and other reserves, performing goodwill and long-lived asset impairment analysis, and establishing valuation allowances on deferred income tax assets and reserves for tax examination exposures. | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Cash equivalents include (1) all highly liquid investments with original maturities of three months or less at the date of purchase and (2) deposits in-transit from banks for payments related to third-party credit card and debit card transactions. | |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts |
We provide an allowance for doubtful accounts based on both historical experience and a specific identification basis. Allowances for doubtful accounts on accounts and notes receivable balances were $11.4 million at January 31, 2015 and $0 at February 1, 2014. Our accounts receivable balance is comprised of various vendor-related and customer-related accounts receivable. Our notes receivable balance is comprised of promissory notes that relate primarily to the sale of assets for our franchised locations. | |
The Company recognizes a provision for losses on franchisee receivables (which consist primarily of franchisee promissory notes) in an amount equal to estimated probable losses net of recoveries. The provision is based on an analysis of expected future write-offs, existing economic conditions, and an assessment of specific identifiable franchisee promissory notes and other franchisee receivables considered at risk or uncollectible. The expense associated with the provision for losses on franchisee receivables is recognized as selling, general, and administrative expense. | |
Merchandise Inventories | Merchandise Inventories |
Merchandise inventories are valued at the lower of cost or market. Merchandise inventories are valued under the retail inventory method, or "RIM," using primarily a last-in, first-out, or "LIFO," cost-flow assumption. | |
Inherent in RIM calculations are certain significant management judgments and estimates including, among others, merchandise markons, markups, markdowns, and shrinkage, which significantly impact the ending inventory valuation at cost and resulting gross margins. The methodologies utilized by us in our application of RIM are consistent for all periods presented. Such methodologies include the development of the cost-to-retail ratios, the groupings of homogeneous classes of merchandise, the development of shrinkage and obsolescence reserves, the accounting for price changes, and the computations inherent in the LIFO adjustment (where applicable). Management believes that RIM provides an inventory valuation that reasonably approximates cost and results in carrying inventory at the lower of cost or market. The inventory allowance for shrinkage and obsolescence was $12.1 million at January 31, 2015 and $11.5 million at February 1, 2014. | |
In connection with our LIFO calculation we estimate the effects of inflation on inventories by utilizing external price indices determined by the U.S. Bureau of Labor Statistics. If we had used the first-in, first-out, or "FIFO" method of inventory valuation instead of the LIFO method, merchandise inventories would have been $0.9 million higher at January 31, 2015 and $1.1 million higher at February 1, 2014. | |
Vendor Rebates and Allowances | Vendor Rebates and Allowances |
Sears Holdings receives rebates and allowances from vendors through a variety of programs and arrangements intended to offset the costs of promoting and selling the vendors' products. Sears Holdings allocates a portion of the rebates and allowances to us based on shipments to or sales of the related products to the Company. These vendor payments are recognized and recorded as a reduction to the cost of merchandise inventories when earned and, thereafter, as a reduction of cost of sales and occupancy as the merchandise is sold. Up-front consideration received from vendors linked to purchases or other commitments is initially deferred and amortized ratably to cost of sales and occupancy over the life of the contract or as performance of the activities specified by the vendor to earn the fee is completed. | |
Property and Equipment | Property and Equipment |
Property and equipment are recorded at cost, less accumulated depreciation. Additions and substantial improvements are capitalized and include expenditures that materially extend the useful lives of existing facilities and equipment. Maintenance and repairs that do not materially improve or extend the lives of the respective assets are expensed as incurred. | |
Impairment of Long-Lived Assets and Costs Associated with Exit Activities | Impairment of Long-Lived Assets and Costs Associated with Exit Activities |
In accordance with accounting standards governing the impairment or disposal of long-lived assets, the carrying value of long-lived assets, including property and equipment, is evaluated whenever events or changes in circumstances indicate that a potential impairment has occurred. Factors that could result in an impairment review include, but are not limited to, a current period cash flow loss combined with a history of cash flow losses, current cash flows that may be insufficient to recover the investment in the property over the remaining useful life, or a projection that demonstrates continuing losses associated with the use of a long-lived asset, significant changes in the manner of use of the assets, or significant changes in business strategies. An impairment loss is recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset (if any) are less than the carrying value of the asset. When an impairment loss is recognized, the carrying amount of the asset is reduced to its estimated fair value as determined based on quoted market prices or through the use of other valuation techniques. We did not record any significant impairment charges with respect to long-lived assets in our 2014, 2013, or 2012 fiscal years. See Note 5 regarding the $167.0 million non-cash goodwill impairment charge we recorded in the third quarter of our 2014 fiscal year. | |
We account for costs associated with location closings in accordance with accounting standards pertaining to accounting for costs associated with exit or disposal activities and compensation. When management makes a decision to close a location we record a liability as of that date for the costs associated with the closing. The recorded liability includes employee severance, inventory markdowns, and other liquidation fees. We record a liability for future lease costs (net of estimated sublease income) when we cease to use the location. | |
Leases | Leases |
We lease certain stores, office facilities, computers and transportation equipment. The determination of operating and capital lease obligations is based on the expected durations of the leases and contractual minimum lease payments specified in the lease agreements. For certain stores, amounts in excess of these minimum lease payments are payable based upon a specified percentage of sales. Contingent rent is accrued during the period it becomes probable that a particular store will achieve a specified sales level thereby triggering a contingent rental obligation. Certain leases also include an escalation clause or clauses and renewal option clauses calling for increased rents. Where the lease contains an escalation clause or concession such as a rent holiday, rent expense is recognized using the straight-line method over the term of the lease. | |
Warranty Reserves | Post-Separation, the Company purchases merchandise from Sears Holdings with warranty. The Company expects the incrementally higher product costs to be similar to the warranty costs incurred to service products that were purchased without warranty prior to the Separation. |
Warranty Reserves | |
Prior to the Separation, we were responsible for providing some instances of warranty coverage on certain Kenmore, Craftsman and DieHard products that we sold. We were self-insured for certain costs related to these claims. Our liability reflected on the Consolidated Balance Sheet, classified within other current liabilities, represented an estimate of the ultimate cost of claims incurred and included those not yet reported at the balance sheet date. In estimating this liability, we utilized loss development factors based on Company-specific data to project the future development of incurred losses. Loss estimates were adjusted based upon actual claims settlements and reported claims. | |
Insurance Programs | Insurance Programs |
Prior to the Separation the Company participated in Sears Holdings’ insurance programs. Post-Separation we maintain with third-party insurance companies our own insurance arrangements for exposures incurred post-Separation for a number of risks including worker’s compensation and general liability claims. | |
Loss Contingencies | Loss Contingencies |
We account for contingent losses in accordance with accounting standards pertaining to loss contingencies. Under accounting standards, loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. These estimates are often initially developed substantially earlier than the ultimate loss is known, and the estimates are refined each accounting period, as additional information is known. | |
Revenue Recognition | Revenue Recognition |
Revenues include sales of merchandise, commissions on merchandise sales made through www.sears.com and www.searsoutlet.com, services and extended-service plans, and delivery and handling revenues related to merchandise sold. We recognize revenues from retail operations at the later of the point of sale or the delivery of goods to the end user. Net sales are presented net of any taxes collected from customers and remitted or payable to governmental authorities. We recognize revenues from commissions on services and extended-service plans, and delivery and handling revenues related to merchandise sold, at the point of sale as we are not the primary obligor with respect to such services and have no future obligations for future performance. | |
The Company accepts Sears Holdings gift cards as tender for purchases and is reimbursed by Sears Holdings for gift cards tendered. | |
Reserves for Sales Returns and Allowances | Reserve for Sales Returns and Allowances |
Revenues from merchandise sales and services are reported net of estimated returns and allowances and exclude sales taxes. The reserve for returns and allowances is calculated as a percentage of sales based on historical return percentages. Estimated returns are recorded as a reduction of sales and cost of sales. | |
Cost of Sales and Occupancy | Cost of Sales and Occupancy |
Cost of sales and occupancy are comprised principally of merchandise costs, warehousing and distribution (including receiving and store delivery) costs, retail store occupancy costs, home services and installation costs, warranty cost, royalties payable to Sears Holdings related to our sale of products branded with one of the KENMORE®, CRAFTSMAN®, and DIEHARD® marks (the "KCD Marks," and products branded with one of the KCD Marks are referred to as the "KCD Products"), customer shipping and handling costs, vendor allowances, markdowns, and physical inventory losses. | |
Dealer and Franchise Commissions | Dealer and Franchisee Commissions |
In accordance with our agreements with our dealers and franchisees, we pay commissions to our dealers and franchisees on the net sales of merchandise and extended-service plans. In addition, each dealer and franchisee can earn commissions for third-party gift cards sold and can earn marketing support, home improvement referrals, rent support, and other items. Commission costs are expensed as incurred and reflected within selling and administrative expenses | |
Selling and Administrative Expenses | Selling and Administrative Expenses |
Selling and administrative expenses are comprised principally of dealer and franchisee commissions, payroll and benefits costs for retail and support employees, advertising, pre-opening costs, and other administrative expenses. | |
Pre-Opensing Costs | Pre-Opening Costs |
Pre-opening and start-up activity costs are expensed in the period in which they occur. | |
Advertising Costs | Advertising Costs |
Advertising costs are expensed as incurred, generally the first time the advertising occurs, and were $74 million, $67 million and $67 million for 2014, 2013 and 2012, respectively. These costs are included within selling and administrative expenses in the accompanying consolidated statements of operations. | |
Income Taxes | Advertising costs are expensed as incurred, generally the first time the advertising occurs, and were $74 million, $67 million and $67 million for 2014, 2013 and 2012, respectively. These costs are included within selling and administrative expenses in the accompanying consolidated statements of operations. |
Income Taxes | |
We provide deferred income tax assets and liabilities based on the estimated future tax effects of differences between the financial and tax basis of assets and liabilities based on currently enacted tax laws. The tax balances and income tax expense recognized by us are based on management’s interpretation of the tax laws of multiple jurisdictions. Income tax expense also reflects our best estimates and assumptions regarding, among other things, the level of future taxable income, tax planning, and any valuation allowance. Future changes in tax laws, changes in projected levels of taxable income, tax planning, and adoption and implementation of new accounting standards could impact the effective tax rate and tax balances recorded by us. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income (loss), the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income. | |
Tax positions are recognized when they are more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is more likely than not of being recognized upon settlement. We will be subject to periodic audits by the Internal Revenue Service and other state and local taxing authorities. Theses audits may challenge certain of the Company’s tax positions such as the timing and amount of income and deductions and the allocation of taxable income to various tax jurisdictions. We evaluate our tax positions and establish liabilities in accordance with the applicable guidance on uncertainty in income taxes. These tax uncertainties are reviewed as facts and circumstances change and are adjusted accordingly. This requires significant management judgment in estimating final outcomes. Actual results could materially differ from these estimates and could significantly affect the effective tax rate and cash flows in future years. Interest and penalties are classified as income tax expense in the Consolidated Statements of Operations. | |
Prior to the Separation, our taxable income was included in the consolidated federal, state and foreign income tax returns of Sears Holdings or its affiliates. Income taxes in these consolidated financial statements have been recognized on a separate return basis. Under a Tax Sharing Agreement between the Company and Sears Holdings entered into prior to the Separation (the "Tax Sharing Agreement"), Sears Holdings is responsible for any federal, state or foreign income tax liability relating to tax periods ending on or before the Separation and the Company is responsible for any federal, state or foreign tax liability relating to tax periods ending after the Separation. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
We determine the fair value of financial instruments in accordance with standards pertaining to fair value measurements. Such standards define fair value and establish a framework for measuring fair value in GAAP. Under fair value measurement accounting standards, fair value is considered to be the exchange price in an orderly transaction between market participants to sell an asset or transfer a liability at the measurement date. We report the fair value of financial assets and liabilities based on the fair value hierarchy prescribed by accounting standards for fair value measurements, which prioritizes the inputs to valuation techniques used to measure fair value into three levels, as follows: | |
Level 1 inputs—unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. An active market for the asset or liability is one in which transactions for the asset or liability occurs with sufficient frequency and volume to provide ongoing pricing information. | |
Level 2 inputs—inputs other than quoted market prices included in Level 1 that are observable, either directly or indirectly, for the asset or liability. Level 2 inputs include, but are not limited to, quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted market prices that are observable for the asset or liability, such as interest rate curves and yield curves observable at commonly quoted intervals, volatilities, credit risk and default rates. | |
Level 3 inputs—unobservable inputs for the asset or liability. | |
Cash and cash equivalents (level 1), accounts and notes receivable, short-term debt (level 2), merchandise payables, and accrued expenses are reflected in the Consolidated Balance Sheets at cost, which approximates fair value due to the short-term nature of these instruments. For short-term debt, the variable interest rates are a significant input in our fair value assessments. The carrying value of long-term notes receivable approximates fair value. | |
We measure certain non-financial assets and liabilities, including long-lived assets, at fair value on a non-recurring basis. As disclosed in Note 5, the Company recorded a goodwill impairment charge during the third quarter of fiscal 2014. The Company utilized Level 3 inputs to measure the fair value of goodwill. | |
New Accounting Pronouncements | New Accounting Pronouncements |
Consolidation | |
In February 2015, the Financial Accounting Standards Board ("FASB") issued an accounting standards update which revises the consolidation model. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership, affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, and provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. This update will be effective for the Company in the first quarter of 2015. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. | |
Extraordinary and Unusual Items | |
In January 2015, the FASB issued an accounting standards update which eliminates the concept of an extraordinary item. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. This update will be effective for the Company in the first quarter of 2015. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. | |
Presentation of Financial Statements - Going Concern | |
In August 2014, the FASB issued an accounting standards update which requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued. If substantial doubt exists, additional disclosures are required. This update will be effective for the Company in the fourth quarter of 2016. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. | |
Revenue from Contracts with Customers | |
In May 2014, the FASB issued an accounting standards update which replaces the current revenue recognition standards. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for the Company in the first quarter of 2017 and may be applied retrospectively for each period presented or as a cumulative-effect adjustment at the date of adoption. The Company is evaluating the effect of adopting this new standard and has not yet determined the method by which the standard will be adopted. | |
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity | |
In April 2014, the FASB issued an accounting standards update which modifies the requirements for disposals to qualify as discontinued operations and expands related disclosure requirements. The update will be effective for the Company in the first quarter of 2015, and early adoption of the update is permitted. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. | |
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists | |
In July 2013, the Financial Accounting Standards Board ("FASB") issued an accounting standards update which requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward that the entity intends to use and is available for settlement at the reporting date. The update was effective and adopted by the Company in the first quarter of 2014 and impacted the Company's disclosures, but otherwise did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. | |
Background_and_Basis_of_Presen2
Background, and Basis of Presentation and Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Schedule of Fiscal Period | The following fiscal periods are presented herein. | ||||||||||||
Fiscal Year | Ended | Weeks | |||||||||||
2014 | January 31, 2015 | 52 | |||||||||||
2013 | February 1, 2014 | 52 | |||||||||||
2012 | February 2, 2013 | 53 | |||||||||||
Value of Property and Equipment | Property and equipment consists of the following: | ||||||||||||
thousands | 31-Jan-15 | 1-Feb-14 | |||||||||||
Land | $ | 1,981 | $ | 1,978 | |||||||||
Buildings and improvements | 54,601 | 54,291 | |||||||||||
Furniture, fixtures and equipment | 35,104 | 32,388 | |||||||||||
Capitalized leases | 799 | 8,458 | |||||||||||
Total property and equipment | 92,485 | 97,115 | |||||||||||
Less: accumulated depreciation | (41,777 | ) | (48,142 | ) | |||||||||
Total property and equipment, net | $ | 50,708 | $ | 48,973 | |||||||||
Schedule of Rent Expense | Rental expense for operating leases was as follows: | ||||||||||||
Fiscal Year | |||||||||||||
thousands | 2014 | 2013 | 2012 | ||||||||||
Minimum rentals | $ | 63,115 | $ | 57,679 | $ | 52,294 | |||||||
Less-Sublease rentals | (28,457 | ) | (19,678 | ) | (14,626 | ) | |||||||
Total | $ | 34,658 | $ | 38,001 | $ | 37,668 | |||||||
Schedule of Capital Leases and Operating Leases | Minimum lease obligations excluding taxes, insurance and other expenses are as follows: | ||||||||||||
Fiscal Year | Capital Leases | Operating Leases | |||||||||||
thousands | |||||||||||||
2015 | $ | 147 | $ | 60,008 | |||||||||
2016 | 58 | 50,830 | |||||||||||
2017 | 46 | 40,367 | |||||||||||
2018 | 46 | 25,311 | |||||||||||
2019 | 26 | 12,267 | |||||||||||
Thereafter | — | 19,764 | |||||||||||
Total Minimum Lease Payments | 323 | 208,547 | |||||||||||
Less - Sublease Income on Leased Properties | — | (78,295 | ) | ||||||||||
Net Minimum Lease Payments | 323 | $ | 130,252 | ||||||||||
Less: | |||||||||||||
Implicit Interest | — | ||||||||||||
Capital Lease Obligations | 323 | ||||||||||||
Less Current Portion of Capital Lease Obligations | (147 | ) | |||||||||||
Long-term Capital Lease Obligations | $ | 176 | |||||||||||
Schedule of Product Warranty Liability | The following table presents changes in the Company’s warranty reserves: | ||||||||||||
thousands | 31-Jan-15 | February 1, 2014 | |||||||||||
Warranty reserve, beginning of period | $ | — | $ | 3,734 | |||||||||
Expense accruals during the period | — | — | |||||||||||
Payments made under warranties | — | (3,734 | ) | ||||||||||
Warranty reserve, end of period | $ | — | $ | — | |||||||||
Accounts_and_Franchisee_Receiv1
Accounts and Franchisee Receivables and Other Assets (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Receivables [Abstract] | |||||||||||||
Schedule of accounts and franchisee receivables and other assets | Accounts and franchisee receivables and other assets consist of the following: | ||||||||||||
31-Jan-15 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Short-term franchisee receivables | $ | 6,169 | $ | 3,652 | $ | 9,821 | |||||||
Miscellaneous receivables | 6,316 | 2,540 | 8,856 | ||||||||||
Long-term franchisee receivables | 20,678 | 28,652 | 49,330 | ||||||||||
Other assets | 1,973 | 290 | 2,263 | ||||||||||
Provision for losses on short-term franchisee receivables (1) | (3,212 | ) | (9 | ) | (3,221 | ) | |||||||
Provision for losses on long-term franchisee receivables (1) | (8,068 | ) | (79 | ) | (8,147 | ) | |||||||
Total Accounts and franchisee receivables and other assets | $ | 23,856 | $ | 35,046 | $ | 58,902 | |||||||
1-Feb-14 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Short-term franchisee receivables | $ | 2,748 | $ | 1,844 | $ | 4,592 | |||||||
Miscellaneous receivables | 13,029 | 1,631 | 14,660 | ||||||||||
Long-term franchisee receivables | 21,207 | 16,409 | 37,616 | ||||||||||
Other assets | 2,662 | 212 | 2,874 | ||||||||||
Total Accounts and franchisee receivables and other assets | $ | 39,646 | $ | 20,096 | $ | 59,742 | |||||||
(1) The Company recognizes a provision for losses on franchisee receivables (which consist primarily of franchisee promissory notes) in an amount equal to estimated probable losses net of recoveries. The provision is based on an analysis of expected future write-offs, existing economic conditions, and an assessment of specific identifiable franchisee promissory notes and other franchisee receivables considered at risk or uncollectible. The expense associated with the provision for losses on franchisee receivables is recognized as selling, general, and administrative expense. Most of our franchisee promissory notes authorize us to deduct debt service from our commissions otherwise due and payable to the franchisees, and we routinely make those deductions to the extent of available commissions payable. We established the provision for losses on franchisee receivables in the third and fourth quarters of fiscal 2014 based on our receivable-by-receivable assessment during the year that some of the franchisee receivables were potentially uncollectible in future periods due to (a) declining results of operations of, or other adverse financial events with respect to, franchise stores that indicated that the franchisees might not be able to meet their debt-service and other obligations to us as they became due and (b) the refusal during the year of one of our franchisees to continue to operate its franchise stores in accordance with the franchisee's agreements with us. |
Provision_for_Losses_on_Franch1
Provision for Losses on Franchisee Receivables (Tables) | 12 Months Ended | ||||
Jan. 31, 2015 | |||||
Receivables [Abstract] | |||||
Schedule of Provision for Losses on Franchisee Receivables | The provision for losses on Franchisee Receivables, which was established in fiscal 2014, consists of the following: | ||||
thousands | 31-Jan-15 | ||||
Provision for losses on franchisee receivables, beginning of period | $ | — | |||
Expense accruals during the period | 13,055 | ||||
Write off of franchisee receivables | (1,687 | ) | |||
Provision for losses on franchisee receivables, end of period | $ | 11,368 | |||
Other_Current_and_LongTerm_Lia1
Other Current and Long-Term Liabilities (Tables) | 12 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Schedule of Accrued Expenses and Other Long-term Liabilities | Other current and long-term liabilities consist of the following: | ||||||||
thousands | 31-Jan-15 | 1-Feb-14 | |||||||
Customer deposits | $ | 30,241 | $ | 35,547 | |||||
Sales and other taxes | 12,458 | 11,403 | |||||||
Accrued expenses | 16,265 | 9,523 | |||||||
Payroll and related items | 4,072 | 8,105 | |||||||
Total Other current and long-term liabilities | $ | 63,036 | $ | 64,578 | |||||
Goodwill_Tables
Goodwill (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||
Schedule of Goodwill | Goodwill allocated to our Hometown and Outlet segments as of January 31, 2015 and changes in the carrying amount of goodwill for the year ended January 31, 2015 are as follows: | ||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Balance (gross) at February 1, 2014 | $ | 167,000 | $ | — | $ | 167,000 | |||||||
Impairment Loss | (167,000 | ) | — | (167,000 | ) | ||||||||
Balance at January 31, 2015 | $ | — | $ | — | $ | — | |||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||||
Jan. 31, 2015 | |||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||
Schedule of Provisions for Income Tax Expense | The provisions for income tax expense for 2014, 2013 and 2012 consist of the following: | ||||||||||||||
Fiscal Year Ended | |||||||||||||||
thousands | 2014 | 2013 | 2012 | ||||||||||||
Income (loss) before income taxes: | |||||||||||||||
U.S. | $ | (172,829 | ) | $ | 58,713 | $ | 95,966 | ||||||||
Foreign | 958 | 1,170 | 4,014 | ||||||||||||
Total | $ | (171,871 | ) | $ | 59,883 | $ | 99,980 | ||||||||
Income tax expense (benefit): | |||||||||||||||
Current: | |||||||||||||||
Federal | $ | 2,872 | $ | 3,808 | $ | 33,469 | |||||||||
State | 608 | 1,341 | 6,848 | ||||||||||||
Foreign | 584 | 570 | 1,224 | ||||||||||||
Total | 4,064 | 5,719 | 41,541 | ||||||||||||
Deferred: | |||||||||||||||
Federal | (6,037 | ) | 15,859 | (2,226 | ) | ||||||||||
State | (1,093 | ) | 2,847 | 585 | |||||||||||
Foreign | — | (92 | ) | — | |||||||||||
Total | (7,130 | ) | 18,614 | (1,641 | ) | ||||||||||
Income tax provision | $ | (3,066 | ) | $ | 24,333 | $ | 39,900 | ||||||||
Schedule of Income Tax Rate Reconciliation | The provisions for income taxes for financial reporting purposes is different from the tax provision computed by applying the statutory federal tax rate. The reconciliation of the tax rate follows: | ||||||||||||||
Fiscal Year Ended | |||||||||||||||
2014 | 2013 | 2012 | |||||||||||||
Federal tax rate | 35 | % | 35 | % | 35 | % | |||||||||
State income tax (net of federal benefit) | 0.2 | % | 4.5 | % | 4.9 | % | |||||||||
Goodwill | (34.0 | )% | — | % | — | % | |||||||||
Other | 0.6 | % | 1.1 | % | — | % | |||||||||
Effective tax rate | 1.8 | % | 40.6 | % | 39.9 | % | |||||||||
Schedule of Deferred Tax Assets and Liabilities | The major components of the deferred tax assets and liabilities as of January 31, 2015 and February 1, 2014 are as follows: | ||||||||||||||
Fiscal Year Ended | |||||||||||||||
thousands | 31-Jan-15 | 1-Feb-14 | |||||||||||||
Deferred tax assets | |||||||||||||||
Bad Debts | $ | 4,412 | $ | — | |||||||||||
Capital Leases | 17 | 183 | |||||||||||||
Deferred Compensation | 548 | 2,030 | |||||||||||||
Deferred Rent | 2,180 | 1,856 | |||||||||||||
Favorable Leases | 105 | 1,155 | |||||||||||||
Inventory | 1,579 | — | |||||||||||||
Property Taxes | 1,108 | 608 | |||||||||||||
Royalty-free License | 53,023 | 57,131 | |||||||||||||
Store Closing Reserve | — | 149 | |||||||||||||
Other | 4,871 | 2,539 | |||||||||||||
Total deferred tax assets | $ | 67,843 | $ | 65,651 | |||||||||||
Deferred tax liabilities | |||||||||||||||
Inventory | — | (5,098 | ) | ||||||||||||
Property | (1,936 | ) | (1,865 | ) | |||||||||||
Other | (751 | ) | (661 | ) | |||||||||||
Total deferred tax liabilities | (2,687 | ) | (7,624 | ) | |||||||||||
Net deferred tax assets | $ | 65,156 | $ | 58,027 | |||||||||||
Related_Party_Agreements_and_T1
Related Party Agreements and Transactions (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Related Party Transactions [Abstract] | |||||||||||||
Schedule of Related Party Transactions | The following table summarizes the transactions with Sears Holdings included in the Company’s Consolidated Financial Statements: | ||||||||||||
Fiscal Year Ended | |||||||||||||
January 31, | February 1, | February 2, | |||||||||||
thousands | 2015 | 2014 | 2013 | ||||||||||
Net Commissions from Sears Holdings Corporation | $ | 99,054 | $ | 90,085 | $ | 83,756 | |||||||
Purchases related to cost of sales and occupancy (1) | 1,499,231 | 1,597,716 | 1,608,741 | ||||||||||
Services included in selling and administrative (1) | 96,027 | 115,740 | 84,003 | ||||||||||
Summary_of_Segment_Data_Tables
Summary of Segment Data (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Segment Reporting [Abstract] | |||||||||||||
Schedule of Segment Data | |||||||||||||
2014 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Net sales | |||||||||||||
Appliances | $ | 1,056,114 | $ | 522,247 | $ | 1,578,361 | |||||||
Lawn and garden | 316,725 | 22,297 | 339,022 | ||||||||||
Tools and paint | 204,117 | 18,471 | 222,588 | ||||||||||
Other | 115,421 | 100,641 | 216,062 | ||||||||||
Total | 1,692,377 | 663,656 | 2,356,033 | ||||||||||
Costs and expenses | |||||||||||||
Cost of sales and occupancy | 1,297,212 | 506,285 | 1,803,497 | ||||||||||
Selling and administrative | 403,367 | 143,269 | 546,636 | ||||||||||
Impairment of goodwill | 167,000 | — | 167,000 | ||||||||||
Depreciation | 3,817 | 6,355 | 10,172 | ||||||||||
Gain on the sale of assets | (113 | ) | — | (113 | ) | ||||||||
Total | 1,871,283 | 655,909 | 2,527,192 | ||||||||||
Operating income (loss) | $ | (178,906 | ) | $ | 7,747 | $ | (171,159 | ) | |||||
Total assets | $ | 430,128 | $ | 215,594 | $ | 645,722 | |||||||
Capital expenditures | $ | 3,046 | $ | 9,803 | $ | 12,849 | |||||||
2013 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Net sales | |||||||||||||
Appliances | $ | 1,160,894 | $ | 478,435 | $ | 1,639,329 | |||||||
Lawn and garden | 319,725 | 23,743 | 343,468 | ||||||||||
Tools and paint | 213,575 | 14,674 | 228,249 | ||||||||||
Other | 117,325 | 93,191 | 210,516 | ||||||||||
Total | 1,811,519 | 610,043 | 2,421,562 | ||||||||||
Costs and expenses | |||||||||||||
Cost of sales and occupancy | 1,389,627 | 453,791 | 1,843,418 | ||||||||||
Selling and administrative | 396,073 | 110,557 | 506,630 | ||||||||||
Depreciation | 6,321 | 5,685 | 12,006 | ||||||||||
Gain on the sale of assets | — | (1,567 | ) | (1,567 | ) | ||||||||
Total | 1,792,021 | 568,466 | 2,360,487 | ||||||||||
Operating income | $ | 19,498 | $ | 41,577 | $ | 61,075 | |||||||
Total assets | $ | 632,437 | $ | 214,748 | $ | 847,185 | |||||||
Capital expenditures | $ | 3,731 | $ | 6,973 | $ | 10,704 | |||||||
2012 | |||||||||||||
thousands | Hometown | Outlet | Total | ||||||||||
Net sales | |||||||||||||
Appliances | $ | 1,151,356 | $ | 452,201 | $ | 1,603,557 | |||||||
Lawn and garden | 343,575 | 19,034 | 362,609 | ||||||||||
Tools and paint | 234,457 | 15,859 | 250,316 | ||||||||||
Other | 159,875 | 77,249 | 237,124 | ||||||||||
Total | 1,889,263 | 564,343 | 2,453,606 | ||||||||||
Costs and expenses | |||||||||||||
Cost of sales and occupancy | 1,433,880 | 406,327 | 1,840,207 | ||||||||||
Selling and administrative | 394,335 | 110,065 | 504,400 | ||||||||||
Depreciation | 3,658 | 5,816 | 9,474 | ||||||||||
Total | 1,831,873 | 522,208 | 2,354,081 | ||||||||||
Operating income | $ | 57,390 | $ | 42,135 | $ | 99,525 | |||||||
Total assets | $ | 633,060 | $ | 152,743 | $ | 785,803 | |||||||
Capital expenditures | $ | 3,338 | $ | 4,772 | $ | 8,110 | |||||||
Quarterly_Financial_Data_Table
Quarterly Financial Data (Tables) | 12 Months Ended | ||||||||||||||||
Jan. 31, 2015 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
Quarterly Financial Data | The following tables reflect the unaudited quarterly consolidated statements of operations for the periods indicated. | ||||||||||||||||
Fiscal Year Ended January 31, 2015 | |||||||||||||||||
thousands, except per share amounts | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
NET SALES | $ | 589,854 | $ | 638,693 | $ | 565,147 | $ | 562,339 | |||||||||
COSTS AND EXPENSES | |||||||||||||||||
Cost of sales and occupancy | 445,955 | 491,604 | 430,085 | 435,853 | |||||||||||||
Selling and administrative | 135,279 | 139,226 | 139,766 | 132,365 | |||||||||||||
Impairment of goodwill | — | — | 167,000 | — | |||||||||||||
Depreciation | 2,288 | 2,067 | 2,035 | 3,782 | |||||||||||||
Loss (gain) on the sale of assets | — | — | (155 | ) | 42 | ||||||||||||
Total costs and expenses | 583,522 | 632,897 | 738,731 | 572,042 | |||||||||||||
Operating income (loss) | 6,332 | 5,796 | (173,584 | ) | (9,703 | ) | |||||||||||
Interest expense | (934 | ) | (905 | ) | (915 | ) | (1,107 | ) | |||||||||
Other income | 680 | 798 | 888 | 783 | |||||||||||||
Income (loss) before income taxes | 6,078 | 5,689 | (173,611 | ) | (10,027 | ) | |||||||||||
Income tax benefit (expense) | (2,399 | ) | (2,329 | ) | 2,401 | 5,393 | |||||||||||
NET INCOME (LOSS) | $ | 3,679 | $ | 3,360 | $ | (171,210 | ) | $ | (4,634 | ) | |||||||
NET INCOME (LOSS) PER COMMON SHARE | |||||||||||||||||
ATTRIBUTABLE TO STOCKHOLDERS | |||||||||||||||||
Basic: | $ | 0.16 | $ | 0.15 | $ | (7.55 | ) | $ | (0.20 | ) | |||||||
Diluted: | $ | 0.16 | $ | 0.15 | $ | (7.55 | ) | $ | (0.20 | ) | |||||||
Basic weighted average common shares outstanding | 22,666 | 22,666 | 22,666 | 22,666 | |||||||||||||
Diluted weighted average common shares outstanding | 22,666 | 22,666 | 22,666 | 22,666 | |||||||||||||
Fiscal Year Ended February 1, 2014 | |||||||||||||||||
thousands, except per share amounts | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
NET SALES | $601,117 | $656,899 | $561,068 | $602,478 | |||||||||||||
COSTS AND EXPENSES | |||||||||||||||||
Cost of sales and occupancy | 446,869 | 508,502 | 425,596 | 462,451 | |||||||||||||
Selling and administrative | 127,188 | 130,928 | 121,698 | 126,816 | |||||||||||||
Depreciation | 2,341 | 2,050 | 2,177 | 5,438 | |||||||||||||
Gain on the sale of assets | — | — | (1,567 | ) | — | ||||||||||||
Total costs and expenses | 576,398 | 641,480 | 547,904 | 594,705 | |||||||||||||
Operating income | 24,719 | 15,419 | 13,164 | 7,773 | |||||||||||||
Interest income (expense) | (589 | ) | (642 | ) | (738 | ) | (1,077 | ) | |||||||||
Other income | 415 | 431 | 460 | 548 | |||||||||||||
Income before income taxes | 24,545 | 15,208 | 12,886 | 7,244 | |||||||||||||
Income tax expense | (9,548 | ) | (6,073 | ) | (5,191 | ) | (3,521 | ) | |||||||||
NET INCOME | $ | 14,997 | $ | 9,135 | $ | 7,695 | $ | 3,723 | |||||||||
NET INCOME PER COMMON SHARE | |||||||||||||||||
ATTRIBUTABLE TO STOCKHOLDERS | |||||||||||||||||
Basic: | $0.65 | $0.40 | $0.33 | $0.16 | |||||||||||||
Diluted: | $0.65 | $0.40 | $0.33 | $0.16 | |||||||||||||
Basic weighted average common shares outstanding | 23,100 | 23,100 | 22,999 | 22,729 | |||||||||||||
Diluted weighted average common shares outstanding | 23,100 | 23,106 | 22,999 | 22,729 | |||||||||||||
Income_loss_per_Common_Share_T
Income (loss) per Common Share (Tables) | 12 Months Ended | |||||||||||
Jan. 31, 2015 | ||||||||||||
Earnings Per Share [Abstract] | ||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the components used to calculate basic and diluted income (loss) per common share attributable to our stockholders. | |||||||||||
Fiscal Year Ended | ||||||||||||
January 31, 2015 | February 1, 2014 | February 2, 2013 | ||||||||||
thousands except income per common share | ||||||||||||
Basic weighted average shares | 22,666 | 22,984 | 23,100 | |||||||||
Dilutive effect of restricted stock | — | 5 | — | |||||||||
Diluted weighted average shares | 22,666 | 22,989 | 23,100 | |||||||||
Net income (loss) | $ | (168,805 | ) | $ | 35,550 | $ | 60,080 | |||||
Income (loss) per common share: | ||||||||||||
Basic | $ | (7.45 | ) | $ | 1.55 | $ | 2.6 | |||||
Diluted | $ | (7.45 | ) | $ | 1.55 | $ | 2.6 | |||||
Equity_Tables
Equity (Tables) | 12 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Schedule of Restricted Stock Award Activity | Changes in restricted stock awards for 2014 were as follows: | |||||||
52 Weeks Ended January 31, 2015 | ||||||||
(Shares in thousands) | Shares | Weighted-Average Fair Value on Date of Grant | ||||||
Beginning of year balance | 87 | $ | 44.45 | |||||
Granted | — | — | ||||||
Vested | — | — | ||||||
Forfeited | (17 | ) | 44.45 | |||||
Balance at 1/31/2015 | 70 | $ | 44.45 | |||||
Defined_Contribution_Plan_Tabl
Defined Contribution Plan (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||
Schedule of Defined Contribution Plan | Expenses for the retirement savings plan were as follows: | ||||||||||||
thousands | 2014 | 2013 | 2012 | ||||||||||
401(k) Savings Plan | $ | 1,137 | $ | 289 | $ | — | |||||||
Background_and_Basis_of_Presen3
Background, and Basis of Presentation and Significant Accounting Policies (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Share data in Millions, unless otherwise specified | Jan. 31, 2015 | Aug. 02, 2014 | 3-May-14 | Nov. 01, 2014 | Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 |
state | segment | ||||||
store | state | ||||||
store | |||||||
Background | |||||||
Number of stores | 1,260 | 1,260 | |||||
Number of states in which the Company operates | 50 | 50 | |||||
Basis of Presentation | |||||||
Number of operating segments | 2 | ||||||
Number of shares of common stock purchsed from Sears Holdings | 23.1 | 23.1 | |||||
Fiscal Year | |||||||
Number of weeks in fiscal year | 371 days | 364 days | 364 days | ||||
Allowance for Doubtful Accounts Receivable | |||||||
Allowance for doubtful accounts | $11,400,000 | $11,400,000 | $0 | ||||
Merchandise Inventories | |||||||
Inventory valuation reserves | 12,100,000 | 12,100,000 | 11,500,000 | ||||
FIFO inventory amount in excess of LIFO | 900,000 | 900,000 | 1,100,000 | ||||
Impairment of Long-Lived Assets and Costs Associated with Exit Activities | |||||||
Impairment of goodwill | 0 | 0 | 0 | 167,000,000 | 0 | 167,000,000 | 0 |
Insurance Programs | |||||||
Insurance expense | 6,000,000 | 6,000,000 | 7,000,000 | ||||
Reserve for Sales Returns and Allowances | |||||||
Reserve for returns and allowances | 2,000,000 | 2,000,000 | |||||
Dealer and Franchise Commissions | |||||||
Commission costs | 242,000,000 | 297,000,000 | 261,000,000 | ||||
Advertising Costs | |||||||
Advertising costs | $67,000,000 | $74,000,000 | $67,000,000 |
Background_and_Basis_of_Presen4
Background, and Basis of Presentation and Significant Accounting Policies (Property and Equipment) (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2015 | Feb. 01, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 92,485 | $97,115 |
Less: accumulated depreciation | -41,777 | -48,142 |
Total property and equipment, net | 50,708 | 48,973 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,981 | 1,978 |
Buildings and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 54,601 | 54,291 |
Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 35,104 | 32,388 |
Capital Leases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 799 | $8,458 |
Minimum [Member] | Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Minimum [Member] | Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 15 years | |
Minimum [Member] | Computer Systems and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Maximum [Member] | Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 10 years | |
Maximum [Member] | Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 25 years | |
Maximum [Member] | Computer Systems and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years |
Background_and_Basis_of_Presen5
Background, and Basis of Presentation and Significant Accounting Policies (Leases) (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 | |
Rent Expense | |||
Minimum rentals | $52,294,000 | $63,115,000 | $57,679,000 |
Less-Sublease rentals | -14,626,000 | -28,457,000 | -19,678,000 |
Total | 37,668,000 | 34,658,000 | 38,001,000 |
Capital Leases | |||
2015 | 147,000 | ||
2016 | 58,000 | ||
2017 | 46,000 | ||
2018 | 46,000 | ||
2019 | 26,000 | ||
Thereafter | 0 | ||
Total Minimum Lease Payments | 323,000 | ||
Less - Sublease Income on Leased Properties | 0 | ||
Implicit Interest | 0 | ||
Capital Lease Obligations | 323,000 | ||
Less Current Portion of Capital Lease Obligations | -147,000 | -662,000 | |
Long-term Capital Lease Obligations | 176,000 | 95,000 | |
Operating Leases | |||
2015 | 60,008,000 | ||
2016 | 50,830,000 | ||
2017 | 40,367,000 | ||
2018 | 25,311,000 | ||
2019 | 12,267,000 | ||
Thereafter | 19,764,000 | ||
Total Minimum Lease Payments | 208,547,000 | ||
Less - Sublease Income on Leased Properties | -78,295,000 | ||
Net Minimum Lease Payments | 130,252,000 | ||
Sears Holdings Corporation [Member] | |||
Related Party Transaction [Line Items] | |||
Number of sublease locations | 83 | ||
Sears Holdings Corporation [Member] | Rent Expense [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses paid to Sears Holdings | $30,900,000 | $27,800,000 | $27,300,000 |
Background_and_Basis_of_Presen6
Background, and Basis of Presentation and Significant Accounting Policies (Warranty Reserve) (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2015 | Feb. 01, 2014 |
Warranty Reserve [Roll Forward] | ||
Warranty reserve, beginning of period | $0 | $3,734 |
Expense accruals during the period | 0 | 0 |
Payments made under warranties | 0 | -3,734 |
Warranty reserve, end of period | $0 | $0 |
Accounts_and_Franchisee_Receiv2
Accounts and Franchisee Receivables and Other Assets (Details) (USD $) | Jan. 31, 2015 | Feb. 01, 2014 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Short-term franchisee receivables | $9,821 | $4,592 |
Long-term franchisee receivables | 8,856 | 14,660 |
Long-term franchisee receivables | 49,330 | 37,616 |
Other assets | 2,263 | 2,874 |
Provision for losses on short-term franchisee receivables (1) | -3,221 | |
Provision for losses on long-term franchisee receivables (1) | -8,147 | |
Total Accounts and franchisee receivables and other assets | 58,902 | 59,742 |
Sears Hometown [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Short-term franchisee receivables | 6,169 | 2,748 |
Long-term franchisee receivables | 6,316 | 13,029 |
Long-term franchisee receivables | 20,678 | 21,207 |
Other assets | 1,973 | 2,662 |
Provision for losses on short-term franchisee receivables (1) | -3,212 | |
Provision for losses on long-term franchisee receivables (1) | -8,068 | |
Total Accounts and franchisee receivables and other assets | 23,856 | 39,646 |
Sears Outlet [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Short-term franchisee receivables | 3,652 | 1,844 |
Long-term franchisee receivables | 2,540 | 1,631 |
Long-term franchisee receivables | 28,652 | 16,409 |
Other assets | 290 | 212 |
Provision for losses on short-term franchisee receivables (1) | -9 | |
Provision for losses on long-term franchisee receivables (1) | -79 | |
Total Accounts and franchisee receivables and other assets | $35,046 | $20,096 |
Provision_for_Losses_on_Franch2
Provision for Losses on Franchisee Receivables (Details) (Franchise Receivable [Member], USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Jan. 31, 2015 |
Franchise Receivable [Member] | |
Provision for Losses on Franchisee Receivables [Roll Forward] | |
Provision for losses on franchisee receivables, beginning of period | $0 |
Expense accruals during the period | 13,055 |
Write off of franchisee receivables | -1,687 |
Provision for losses on franchisee receivables, end of period | $11,368 |
Other_Current_and_LongTerm_Lia2
Other Current and Long-Term Liabilities (Details) (USD $) | Jan. 31, 2015 | Feb. 01, 2014 |
In Thousands, unless otherwise specified | ||
Payables and Accruals [Abstract] | ||
Customer deposits | $30,241 | $35,547 |
Sales and other taxes | 12,458 | 11,403 |
Accrued expenses | 16,265 | 9,523 |
Payroll and related items | 4,072 | 8,105 |
Total Other current and long-term liabilities | $63,036 | $64,578 |
Goodwill_Details
Goodwill (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Jan. 31, 2015 | Aug. 02, 2014 | 3-May-14 | Nov. 01, 2014 | Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 |
Goodwill [Line Items] | |||||||
Balance (gross) at February 1, 2014 | $167,000 | $167,000 | $167,000 | ||||
Impairment Loss | 0 | 0 | 0 | -167,000 | 0 | -167,000 | 0 |
Balance at January 31, 2015 | 0 | 0 | 167,000 | ||||
Sears Outlet [Member] | |||||||
Goodwill [Line Items] | |||||||
Balance (gross) at February 1, 2014 | 0 | 0 | 0 | ||||
Impairment Loss | 0 | ||||||
Balance at January 31, 2015 | 0 | 0 | |||||
Sears Hometown [Member] | |||||||
Goodwill [Line Items] | |||||||
Balance (gross) at February 1, 2014 | 167,000 | 167,000 | 167,000 | ||||
Impairment Loss | -167,000 | ||||||
Balance at January 31, 2015 | $0 | $0 |
Income_Taxes_Narrative_Details
Income Taxes (Narrative) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Jan. 31, 2015 | Feb. 01, 2014 |
Income Tax Disclosure [Abstract] | ||
Increase in deferred tax asset | $80.40 | |
Tax credit carryforwards, foreign | 0.3 | |
Valuation allowance | 0.1 | 0.3 |
Decrease in valuation allowance | $0.20 |
Income_Taxes_Provisions_for_In
Income Taxes (Provisions for Income Tax Expense) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
In Thousands, unless otherwise specified | Jan. 31, 2015 | Aug. 02, 2014 | 3-May-14 | Feb. 01, 2014 | Nov. 02, 2013 | Aug. 03, 2013 | 4-May-13 | Nov. 01, 2014 | Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 |
Income (loss) before income taxes: | |||||||||||
U.S. | $95,966 | ($172,829) | $58,713 | ||||||||
Foreign | 4,014 | 958 | 1,170 | ||||||||
Income (loss) before income taxes | -10,027 | 5,689 | 6,078 | 7,244 | 12,886 | 15,208 | 24,545 | -173,611 | 99,980 | -171,871 | 59,883 |
Current: | |||||||||||
Federal | 33,469 | 2,872 | 3,808 | ||||||||
State | 6,848 | 608 | 1,341 | ||||||||
Foreign | 1,224 | 584 | 570 | ||||||||
Total | 41,541 | 4,064 | 5,719 | ||||||||
Deferred: | |||||||||||
Federal | -2,226 | -6,037 | 15,859 | ||||||||
State | 585 | -1,093 | 2,847 | ||||||||
Foreign | 0 | 0 | -92 | ||||||||
Total | -1,641 | -7,130 | 18,614 | ||||||||
Income tax provision | ($5,393) | $2,329 | $2,399 | $3,521 | $5,191 | $6,073 | $9,548 | ($2,401) | $39,900 | ($3,066) | $24,333 |
Income_Taxes_Income_Tax_Rate_R
Income Taxes (Income Tax Rate Reconciliation) (Details) | 9 Months Ended | 12 Months Ended | |
Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 | |
Income Tax Disclosure [Abstract] | |||
Federal tax rate | 35.00% | 35.00% | 35.00% |
State income tax (net of federal benefit) | 4.90% | 0.20% | 4.50% |
Goodwill | 0.00% | -34.00% | 0.00% |
Other | 0.00% | 0.60% | 1.10% |
Effective tax rate | 39.90% | 1.80% | 40.60% |
Income_Taxes_Deferred_Tax_Asse
Income Taxes (Deferred Tax Assets and Liabilities) (Details) (USD $) | Jan. 31, 2015 | Feb. 01, 2014 |
In Thousands, unless otherwise specified | ||
Deferred tax assets | ||
Bad Debts | $4,412 | $0 |
Capital Leases | 17 | 183 |
Deferred Compensation | 548 | 2,030 |
Deferred Rent | 2,180 | 1,856 |
Favorable Leases | 105 | 1,155 |
Inventory | 1,579 | 0 |
Property Taxes | 1,108 | 608 |
Royalty-free License | 53,023 | 57,131 |
Store Closing Reserve | 0 | 149 |
Other | 4,871 | 2,539 |
Total deferred tax assets | 67,843 | 65,651 |
Deferred tax liabilities | ||
Inventory | 0 | -5,098 |
Property | -1,936 | -1,865 |
Other | -751 | -661 |
Total deferred tax liabilities | -2,687 | -7,624 |
Net deferred tax assets | $65,156 | $58,027 |
Related_Party_Agreements_and_T2
Related Party Agreements and Transactions (Details) (USD $) | 12 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Feb. 01, 2014 | Feb. 02, 2013 | Oct. 11, 2012 | Oct. 27, 2012 | Jan. 31, 2015 | ||||
Related Party Transactions and Concentration of Risk [Line Items] | ||||||||
Exclusion of on-line sales | $93,600,000 | $65,100,000 | ||||||
ESL [Member] | ||||||||
Related Party Transactions and Concentration of Risk [Line Items] | ||||||||
Beneficial interest acquired by related party, percentage | 47.00% | 53.00% | ||||||
Sears Holdings Corporation [Member] | ||||||||
Related Party Transactions and Concentration of Risk [Line Items] | ||||||||
Net Commissions from Sears Holdings Corporation | 90,085,000 | [1] | 83,756,000 | [1] | 99,054,000 | [1] | ||
Purchases related to cost of sales and occupancy (1) | 1,597,716,000 | 1,608,741,000 | 1,499,231,000 | |||||
Services included in selling and administrative (1) | 115,740,000 | 84,003,000 | 96,027,000 | |||||
Corporate expenses from Sears Holdings | $84,000,000 | $29,700,000 | $54,300,000 | |||||
Invoice payment term | 10 days | |||||||
Cost of Inventory [Member] | Supplier Concentration Risk [Member] | Sears Holdings Corporation [Member] | ||||||||
Related Party Transactions and Concentration of Risk [Line Items] | ||||||||
Percentage of total purchases of inventory | 84.00% | |||||||
[1] | We reduced the amounts previously presented for fiscal years 2013 and 2012 by $93.6 million and $65.1 million, respectively, in "Purchases related to cost of sales and occupancy" and have reclassified the amounts into "Services." The reclassified items were primarily costs associated with marketing. |
Financing_Arrangements_Details
Financing Arrangements (Details) (Senior ABL Facility [Member], USD $) | 9 Months Ended | 12 Months Ended | |
Nov. 01, 2014 | Jan. 31, 2015 | Oct. 11, 2012 | |
Debt Instrument [Line Items] | |||
Aggregate maximum borrowings | $250,000,000 | ||
Amount outstanding | 100,000,000 | ||
Remaining borrowing capacity | 84,100,000 | ||
Covenant, maximum percentage of Loan Cap | 25.00% | ||
Covenant, component of aggregate commitment calculation | 50,000,000 | ||
Covenant, fixed charge coverage ratio | 1.1 | ||
Covenant, period of credit extensions outstanding | 120 days | ||
Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate maximum borrowings | 250,000,000 | ||
Increases in aggregate principal | 100,000,000 | ||
Letter of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate maximum borrowings | 75,000,000 | ||
Amount outstanding | 5,600,000 | ||
Remaining borrowing capacity | 157,900,000 | ||
Swingline Loans [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate maximum borrowings | $25,000,000 | ||
London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Variable rate | 2.16% | ||
Base Rate [Member] | |||
Debt Instrument [Line Items] | |||
Variable rate | 4.25% |
Summary_of_Segment_Data_Detail
Summary of Segment Data (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2015 | Aug. 02, 2014 | 3-May-14 | Feb. 01, 2014 | Nov. 02, 2013 | Aug. 03, 2013 | 4-May-13 | Nov. 01, 2014 | Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 | Feb. 02, 2013 | |
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | $562,339,000 | $638,693,000 | $589,854,000 | $602,478,000 | $561,068,000 | $656,899,000 | $601,117,000 | $565,147,000 | $2,453,606,000 | $2,356,033,000 | $2,421,562,000 | |
Cost of sales and occupancy | 435,853,000 | 491,604,000 | 445,955,000 | 462,451,000 | 425,596,000 | 508,502,000 | 446,869,000 | 430,085,000 | 1,840,207,000 | 1,803,497,000 | 1,843,418,000 | |
Selling and administrative | 132,365,000 | 139,226,000 | 135,279,000 | 126,816,000 | 121,698,000 | 130,928,000 | 127,188,000 | 139,766,000 | 504,400,000 | 546,636,000 | 506,630,000 | |
Impairment of goodwill | 0 | 0 | 0 | 167,000,000 | 0 | 167,000,000 | 0 | |||||
Depreciation | 3,782,000 | 2,067,000 | 2,288,000 | 5,438,000 | 2,177,000 | 2,050,000 | 2,341,000 | 2,035,000 | 9,474,000 | 10,172,000 | 12,006,000 | |
Gain on the sale of assets | 42,000 | 0 | 0 | 0 | -1,567,000 | 0 | 0 | -155,000 | 0 | -113,000 | -1,567,000 | |
Total costs and expenses | 572,042,000 | 632,897,000 | 583,522,000 | 594,705,000 | 547,904,000 | 641,480,000 | 576,398,000 | 738,731,000 | 2,354,081,000 | 2,527,192,000 | 2,360,487,000 | |
Operating income (loss) | -9,703,000 | 5,796,000 | 6,332,000 | 7,773,000 | 13,164,000 | 15,419,000 | 24,719,000 | -173,584,000 | 99,525,000 | -171,159,000 | 61,075,000 | |
Total assets | 645,722,000 | 847,185,000 | 645,722,000 | 847,185,000 | 785,803,000 | |||||||
Capital expenditures | 8,110,000 | 12,849,000 | 10,704,000 | |||||||||
Appliances [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 1,603,557,000 | 1,578,361,000 | 1,639,329,000 | |||||||||
Lawn and Garden [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 362,609,000 | 339,022,000 | 343,468,000 | |||||||||
Tools and Paint[Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 250,316,000 | 222,588,000 | 228,249,000 | |||||||||
Other [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 237,124,000 | 216,062,000 | 210,516,000 | |||||||||
Sears Hometown [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Initial franchise revenue | 11,200,000 | 300,000 | 5,500,000 | |||||||||
Net sales | 1,889,263,000 | 1,692,377,000 | 1,811,519,000 | |||||||||
Cost of sales and occupancy | 1,433,880,000 | 1,297,212,000 | 1,389,627,000 | |||||||||
Selling and administrative | 394,335,000 | 403,367,000 | 396,073,000 | |||||||||
Impairment of goodwill | 167,000,000 | |||||||||||
Depreciation | 3,658,000 | 3,817,000 | 6,321,000 | |||||||||
Gain on the sale of assets | -113,000 | 0 | ||||||||||
Total costs and expenses | 1,831,873,000 | 1,871,283,000 | 1,792,021,000 | |||||||||
Operating income (loss) | 57,390,000 | -178,906,000 | 19,498,000 | |||||||||
Total assets | 430,128,000 | 632,437,000 | 430,128,000 | 632,437,000 | 633,060,000 | |||||||
Capital expenditures | 3,338,000 | 3,046,000 | 3,731,000 | |||||||||
Sears Hometown [Member] | Appliances [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 1,151,356,000 | 1,056,114,000 | 1,160,894,000 | |||||||||
Sears Hometown [Member] | Lawn and Garden [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 343,575,000 | 316,725,000 | 319,725,000 | |||||||||
Sears Hometown [Member] | Tools and Paint[Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 234,457,000 | 204,117,000 | 213,575,000 | |||||||||
Sears Hometown [Member] | Other [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 159,875,000 | 115,421,000 | 117,325,000 | |||||||||
Sears Outlet [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Initial franchise revenue | 16,600,000 | 20,100,000 | ||||||||||
Net sales | 564,343,000 | 663,656,000 | 610,043,000 | |||||||||
Cost of sales and occupancy | 406,327,000 | 506,285,000 | 453,791,000 | |||||||||
Selling and administrative | 110,065,000 | 143,269,000 | 110,557,000 | |||||||||
Impairment of goodwill | 0 | |||||||||||
Depreciation | 5,816,000 | 6,355,000 | 5,685,000 | |||||||||
Gain on the sale of assets | 0 | -1,567,000 | ||||||||||
Total costs and expenses | 522,208,000 | 655,909,000 | 568,466,000 | |||||||||
Operating income (loss) | 42,135,000 | 7,747,000 | 41,577,000 | |||||||||
Total assets | 215,594,000 | 214,748,000 | 215,594,000 | 214,748,000 | 152,743,000 | |||||||
Capital expenditures | 4,772,000 | 9,803,000 | 6,973,000 | |||||||||
Sears Outlet [Member] | Appliances [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 452,201,000 | 522,247,000 | 478,435,000 | |||||||||
Sears Outlet [Member] | Lawn and Garden [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 19,034,000 | 22,297,000 | 23,743,000 | |||||||||
Sears Outlet [Member] | Tools and Paint[Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 15,859,000 | 18,471,000 | 14,674,000 | |||||||||
Sears Outlet [Member] | Other [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | $77,249,000 | $100,641,000 | $93,191,000 |
Quarterly_Financial_Data_Detai
Quarterly Financial Data (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Jan. 31, 2015 | Aug. 02, 2014 | 3-May-14 | Feb. 01, 2014 | Nov. 02, 2013 | Aug. 03, 2013 | 4-May-13 | Nov. 01, 2014 | Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 | Feb. 02, 2013 |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
NET SALES | $562,339 | $638,693 | $589,854 | $602,478 | $561,068 | $656,899 | $601,117 | $565,147 | $2,453,606 | $2,356,033 | $2,421,562 | |
COSTS AND EXPENSES | ||||||||||||
Cost of sales and occupancy | 435,853 | 491,604 | 445,955 | 462,451 | 425,596 | 508,502 | 446,869 | 430,085 | 1,840,207 | 1,803,497 | 1,843,418 | |
Selling and administrative | 132,365 | 139,226 | 135,279 | 126,816 | 121,698 | 130,928 | 127,188 | 139,766 | 504,400 | 546,636 | 506,630 | |
Impairment of goodwill | 0 | 0 | 0 | 167,000 | 0 | 167,000 | 0 | |||||
Depreciation | 3,782 | 2,067 | 2,288 | 5,438 | 2,177 | 2,050 | 2,341 | 2,035 | 9,474 | 10,172 | 12,006 | |
Gain on the sale of assets | 42 | 0 | 0 | 0 | -1,567 | 0 | 0 | -155 | 0 | -113 | -1,567 | |
Total costs and expenses | 572,042 | 632,897 | 583,522 | 594,705 | 547,904 | 641,480 | 576,398 | 738,731 | 2,354,081 | 2,527,192 | 2,360,487 | |
Operating income (loss) | -9,703 | 5,796 | 6,332 | 7,773 | 13,164 | 15,419 | 24,719 | -173,584 | 99,525 | -171,159 | 61,075 | |
Interest income (expense) | -1,107 | -905 | -934 | -1,077 | -738 | -642 | -589 | -915 | ||||
Other income | 783 | 798 | 680 | 548 | 460 | 431 | 415 | 888 | 1,354 | 3,149 | 1,854 | |
Income (loss) before income taxes | -10,027 | 5,689 | 6,078 | 7,244 | 12,886 | 15,208 | 24,545 | -173,611 | 99,980 | -171,871 | 59,883 | |
Income tax benefit (expense) | 5,393 | -2,329 | -2,399 | -3,521 | -5,191 | -6,073 | -9,548 | 2,401 | -39,900 | 3,066 | -24,333 | |
NET INCOME (LOSS) | ($4,634) | $3,360 | $3,679 | $3,723 | $7,695 | $9,135 | $14,997 | ($171,210) | $60,080 | ($168,805) | $35,550 | $60,080 |
Basic, (in usd per share) | ($0.20) | $0.15 | $0.16 | $0.16 | $0.33 | $0.40 | $0.65 | ($7.55) | $2.60 | ($7.45) | $1.55 | |
Diluted, (in usd per share) | ($0.20) | $0.15 | $0.16 | $0.16 | $0.33 | $0.40 | $0.65 | ($7.55) | $2.60 | ($7.45) | $1.55 | |
Basic weighted average common shares outstanding (in shares) | 22,666 | 22,666 | 22,666 | 22,729 | 22,999 | 23,100 | 23,100 | 22,666 | 23,100 | 22,666 | 22,984 | |
Diluted weighted average common shares outstanding (in shares) | 22,666 | 22,666 | 22,666 | 22,729 | 22,999 | 23,106 | 23,100 | 22,666 | 23,100 | 22,666 | 22,989 |
Income_loss_per_Common_Share_D
Income (loss) per Common Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Jan. 31, 2015 | Aug. 02, 2014 | 3-May-14 | Feb. 01, 2014 | Nov. 02, 2013 | Aug. 03, 2013 | 4-May-13 | Nov. 01, 2014 | Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 | Feb. 02, 2013 |
Earnings Per Share [Abstract] | ||||||||||||
Number of shares of common stock purchsed from Sears Holdings | 23,100,000 | 23,100,000 | ||||||||||
Basic weighted average shares | 22,666,000 | 22,666,000 | 22,666,000 | 22,729,000 | 22,999,000 | 23,100,000 | 23,100,000 | 22,666,000 | 23,100,000 | 22,666,000 | 22,984,000 | |
Dilutive effect of restricted stock | 0 | 0 | 5,000 | |||||||||
Diluted weighted average shares | 22,666,000 | 22,666,000 | 22,666,000 | 22,729,000 | 22,999,000 | 23,106,000 | 23,100,000 | 22,666,000 | 23,100,000 | 22,666,000 | 22,989,000 | |
Net income (loss) | ($4,634) | $3,360 | $3,679 | $3,723 | $7,695 | $9,135 | $14,997 | ($171,210) | $60,080 | ($168,805) | $35,550 | $60,080 |
Income (loss) per common share: | ||||||||||||
Basic (usd per share) | $2.60 | ($7.45) | $1.55 | |||||||||
Diluted (usd per share) | $2.60 | ($7.45) | $1.55 |
Equity_Narrative_Details
Equity (Narrative) (Details) (USD $) | 12 Months Ended | 3 Months Ended | ||
Jan. 31, 2015 | Feb. 01, 2014 | Aug. 02, 2014 | 14-May-13 | |
Stock-based Compensation | ||||
Shares reserved under plan | 4,000,000 | |||
Share Repurchase Program | ||||
Authorized amount | $25,000,000 | |||
Shares repurchased | 434,398 | |||
Share-based compensation | 12,500,000 | 12,523,000 | ||
Share price | $28.83 | |||
Remaining authorized repurchase amount | 12,500,000 | |||
Restricted Stock [Member] | ||||
Stock-based Compensation | ||||
Stock granted | 70,247 | 89,221 | ||
Forfeited in period | 18,974 | |||
Grant date fair value | 3,900,000 | |||
Unrecognized compensation cost | 1,300,000 | |||
Share-based compensation expense | $900,000 | |||
Period for recognition | 1 year 3 months | |||
Restricted Stock [Member] | May 16, 2016 [Member] | ||||
Stock-based Compensation | ||||
Stock granted | 70,247 |
Equity_Restricted_Stock_Awards
Equity (Restricted Stock Awards) (Details) (Restricted Stock [Member], USD $) | 12 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Jan. 31, 2015 |
Restricted Stock [Member] | |
Shares | |
Beginning of year balance | 87 |
Granted | 0 |
Vested | 0 |
Forfeited | -17 |
Balance at end of period | 70 |
Weighted-Average Fair Value on Date of Grant | |
Beginning of year balance (in dollars per share) | $44.45 |
Granted (in dollars per share) | $0 |
Vested (in dollars per share) | $0 |
Forfeited (in dollars per share) | $44.45 |
Balance at end of period (in dollars per share) | $44.45 |
Defined_Contribution_Plan_Deta
Defined Contribution Plan (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Oct. 27, 2012 | Jan. 31, 2015 | Feb. 01, 2014 |
Compensation and Retirement Disclosure [Abstract] | |||
401(k) Savings Plan | $0 | $1,137 | $289 |