Document and Entity Information
Document and Entity Information Document - USD ($) | 12 Months Ended | ||
Jan. 30, 2016 | Mar. 30, 2016 | Aug. 01, 2015 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Jan. 30, 2016 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Sears Hometown & Outlet Stores, Inc. | ||
Entity Central Index Key | 1,548,309 | ||
Current Fiscal Year End Date | --01-30 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 22,718,800 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 99,469,761 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | |
NET SALES | $ 2,287,788 | $ 2,356,033 | $ 2,421,562 |
COSTS AND EXPENSES | |||
Cost of sales and occupancy | 1,769,286 | 1,803,497 | 1,843,418 |
Selling and administrative | 546,128 | 546,636 | 506,630 |
Impairment of goodwill | 0 | 167,000 | 0 |
Depreciation | 14,546 | 10,172 | 12,006 |
Gain on the sale of assets | 0 | (113) | (1,567) |
Total costs and expenses | 2,329,960 | 2,527,192 | 2,360,487 |
Operating income (loss) | (42,172) | (171,159) | 61,075 |
Interest expense | (2,826) | (3,861) | (3,046) |
Other income | 2,585 | 3,149 | 1,854 |
Income (loss) before income taxes | (42,413) | (171,871) | 59,883 |
Income tax benefit (expense) | 15,152 | 3,066 | (24,333) |
NET INCOME (LOSS) | $ (27,261) | $ (168,805) | $ 35,550 |
NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO SHAREHOLDERS | |||
Basic (usd per share) | $ (1.20) | $ (7.45) | $ 1.55 |
Diluted (usd per share) | $ (1.20) | $ (7.45) | $ 1.55 |
Basic weighted average common shares outstanding (in shares) | 22,666 | 22,666 | 22,984 |
Diluted weighted average common shares outstanding (in shares) | 22,666 | 22,666 | 22,989 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jan. 30, 2016 | Jan. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 18,244 | $ 19,746 |
Accounts and franchisee receivables, net | 11,753 | 15,456 |
Merchandise inventories | 434,846 | 442,743 |
Prepaid expenses and other current assets | 22,176 | 19,350 |
Total current assets | 487,019 | 497,295 |
PROPERTY AND EQUIPMENT, net | 49,315 | 50,708 |
INTANGIBLE ASSETS, net | 4,377 | 0 |
LONG-TERM DEFERRED TAXES | 79,141 | 54,273 |
OTHER ASSETS, net | 13,981 | 43,446 |
TOTAL ASSETS | 633,833 | 645,722 |
CURRENT LIABILITIES | ||
Short-term borrowings | 68,300 | 84,100 |
Payable to Sears Holdings Corporation | 54,126 | 61,089 |
Accounts payable | 39,762 | 14,888 |
Other current liabilities | 66,466 | 61,085 |
Total current liabilities | 228,654 | 221,162 |
OTHER LONG-TERM LIABILITIES | 2,670 | 2,274 |
TOTAL LIABILITIES | $ 231,324 | $ 223,436 |
COMMITMENTS AND CONTINGENCIES | ||
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 | $ 227 |
Capital in excess of par value | 555,372 | 547,888 |
Retained earnings (deficit) | (153,090) | (125,829) |
TOTAL STOCKHOLDERS' EQUITY | 402,509 | 422,286 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 633,833 | $ 645,722 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jan. 30, 2016 | Jan. 31, 2015 |
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 | 22,722,000 | 22,736,000 |
Common Stock, Outstanding | 22,722,000 | 22,736,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | $ (27,261) | $ (168,805) | $ 35,550 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | |||
Depreciation and amortization | 14,546 | 10,172 | 12,006 |
Share based compensation | (70) | 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 | 25,426 | 13,055 | 0 |
Change in operating assets and liabilities: | |||
Accounts and franchisee receivables | 1,056 | (12,988) | (26,823) |
Merchandise inventories | 7,897 | 39,364 | (53,670) |
Payable to Sears Holdings Corporation | (6,963) | (7,307) | (11,095) |
Accounts payable | 24,874 | (9,241) | (7,701) |
Customer deposits | (5,982) | (5,306) | 633 |
Deferred income taxes | (6,431) | (7,129) | 18,614 |
Other operating assets | (13,123) | 1,069 | 1,525 |
Other operating liabilities | 11,576 | 3,763 | (22,751) |
Net cash provided by (used in) operating activities | 25,545 | 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 | (11,430) | (12,849) | (10,704) |
Net cash used in investing activities | (11,430) | (12,695) | (8,063) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Common stock repurchased and retired | 0 | 0 | (12,523) |
Net borrowings (payments) of capital lease obligations | 183 | (434) | (739) |
Net short-term borrowings (payments) | (15,800) | (15,000) | 79,100 |
Net cash provided by (used in) financing activities | (15,617) | (15,434) | 65,838 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (1,502) | (3,729) | 3,407 |
CASH AND CASH EQUIVALENTS—Beginning of period | 19,746 | 23,475 | 20,068 |
CASH AND CASH EQUIVALENTS—End of period | 18,244 | 19,746 | 23,475 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||
Cash paid for interest | 2,945 | 3,622 | 3,226 |
Cash paid for income taxes | (5,764) | 824 | 21,022 |
Tax adjustment related to separation | 7,554 | 0 | 0 |
Reacquisition rights in exchange for notes receivable | $ 6,100 | $ 0 | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock [Member] | Capital in Excess of Par Value [Member] | Retained Earnings [Member] |
Beginning balance at Feb. 02, 2013 | $ 566,287 | $ 231 | $ 556,575 | $ 9,481 |
Beginning balance, Shares at Feb. 02, 2013 | 23,100,000 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 35,550 | 35,550 | ||
Share-based compensation | 911 | $ 1 | 910 | |
Share-based compensation, shares | 87,000 | |||
Common stock repurchased and retired | $ (12,523) | $ (4) | (10,464) | (2,055) |
Common stock repurchased and retired, shares | (434,398) | (434,000) | ||
Tax adjustment related to separation | $ 0 | |||
Ending balance at Feb. 01, 2014 | 590,225 | $ 228 | 547,021 | 42,976 |
Ending balance, Shares at Feb. 01, 2014 | 22,753,000 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (168,805) | (168,805) | ||
Share-based compensation | $ 866 | $ (1) | 867 | |
Share-based compensation, shares | 17,000 | |||
Common stock repurchased and retired, shares | 0 | |||
Tax adjustment related to separation | $ 0 | |||
Ending balance at Jan. 31, 2015 | $ 422,286 | $ 227 | 547,888 | (125,829) |
Ending balance, Shares at Jan. 31, 2015 | 22,736,000 | 22,736,000 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | $ 1,292 | |||
Ending balance at May. 02, 2015 | 423,171 | |||
Beginning balance at Jan. 31, 2015 | $ 422,286 | $ 227 | 547,888 | (125,829) |
Beginning balance, Shares at Jan. 31, 2015 | 22,736,000 | 22,736,000 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | $ 887 | |||
Ending balance at Aug. 01, 2015 | 422,774 | |||
Beginning balance at Jan. 31, 2015 | $ 422,286 | $ 227 | 547,888 | (125,829) |
Beginning balance, Shares at Jan. 31, 2015 | 22,736,000 | 22,736,000 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | $ (4,656) | |||
Ending balance at Oct. 31, 2015 | 417,394 | |||
Beginning balance at Jan. 31, 2015 | $ 422,286 | $ 227 | 547,888 | (125,829) |
Beginning balance, Shares at Jan. 31, 2015 | 22,736,000 | 22,736,000 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | $ (27,261) | (27,261) | ||
Share-based compensation | $ (70) | (70) | ||
Share-based compensation, shares | (14,000) | |||
Common stock repurchased and retired, shares | 0 | |||
Tax adjustment related to separation | $ 7,554 | 7,554 | ||
Ending balance at Jan. 30, 2016 | $ 402,509 | $ 227 | 555,372 | (153,090) |
Ending balance, Shares at Jan. 30, 2016 | 22,722,000 | 22,722,000 | ||
Beginning balance at May. 02, 2015 | $ 423,171 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (405) | |||
Ending balance at Aug. 01, 2015 | 422,774 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (5,543) | |||
Ending balance at Oct. 31, 2015 | 417,394 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (22,605) | |||
Ending balance at Jan. 30, 2016 | $ 402,509 | $ 227 | $ 555,372 | $ (153,090) |
Ending balance, Shares at Jan. 30, 2016 | 22,722,000 | 22,722,000 |
Background, and Basis of Presen
Background, and Basis of Presentation and Significant Accounting Policies | 12 Months Ended |
Jan. 30, 2016 | |
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 30, 2016, the Company or our independent dealers and franchisees operated a total of 1,160 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. 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. We operate through two segments--our Sears Hometown and Hardware segment ("Hometown") and our Sears Outlet segment ("Outlet"). 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 2015 January 30, 2016 52 2014 January 31, 2015 52 2013 February 1, 2014 52 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 $12.1 million at January 30, 2016 and $11.4 million at January 31, 2015. 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 provides an allowance for losses on franchisee receivables (which consist primarily of franchisee promissory notes) in an amount equal to estimated probable losses net of recoveries. The allowance 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 allowance 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 $9.8 million at January 30, 2016 and $12.1 million at January 31, 2015. 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 $0.6 million higher at January 30, 2016 and $0.9 million higher at January 31, 2015. 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 January 30, 2016 January 31, 2015 Land $ 2,123 $ 1,981 Buildings and improvements 49,680 54,601 Furniture, fixtures and equipment 37,681 35,104 Capitalized leases 1,005 799 Total property and equipment 90,489 92,485 Less: accumulated depreciation (41,174 ) (41,777 ) Total property and equipment, net $ 49,315 $ 50,708 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. Depreciation expense was $12.8 million and $10.2 million for fiscal years 2015 and 2014, respectively. As of January 30, 2016, management has identified two properties that are deemed held for sale based on criteria in Accounting Standards Codification ("ASC") 360-10-45-9. These properties are reflected in each category of Property and Equipment with the exception of capitalized leases in the table above and had a carrying value of $3.8 million as of January 30, 2016. These properties are currently listed on the open market and are expected to be sold to third parties in the first half of fiscal year 2016. As of January 30, 2016, the expected fair value less the cost of sale exceeded the carrying value of the Property and Equipment. 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 2015, 2014, or 2013 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 inventory markdowns associated with the closing. 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 63 locations. We had rent expense paid to Sears Holdings of $19.3 million , $27.8 million and $27.3 million in 2015, 2014 and 2013, respectively. We also had rent expenses paid to Seritage Growth Properties of $0.5 million in 2015. Rental expense for operating leases was as follows: Fiscal Year thousands 2015 2014 2013 Minimum rentals $ 63,336 $ 63,115 $ 57,679 Less-Sublease rentals (25,505 ) (28,457 ) (19,678 ) Total $ 37,831 $ 34,658 $ 38,001 Minimum lease obligations excluding taxes, insurance and other expenses are as follows: Fiscal Year Capital Leases Operating Leases thousands 2016 $ 124 $ 55,656 2017 145 44,173 2018 145 29,755 2019 92 17,319 2020 — 11,793 Thereafter — 14,687 Total Minimum Lease Payments 506 173,383 Less - Sublease Income on Leased Properties — (33,963 ) Net Minimum Lease Payments $ 506 $ 139,420 Less: Implicit Interest — Capital Lease Obligations 506 Less Current Portion of Capital Lease Obligations (124 ) Long-term Capital Lease Obligations $ 382 Insurance Programs We maintain with third-party insurance companies our own insurance arrangements for exposures incurred for a number of risks including worker’s compensation and general liability claims. Insurance expense of $4 million , $6 million and $7 million was recorded during 2015, 2014 and 2013, 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 $1 million at January 30, 2016 and $2 million at January 31, 2015. 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 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 $278 million , $297 million , and $261 million in 2015, 2014 and 2013, 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 $71 million , $74 million and $67 million for 2015, 2014 and 2013, 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 Generally Accepted Accounting Principles ("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, merchandise payables, accrued expenses (level 1), accounts and notes receivable, and short-term debt (level 2) 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 and recorded certain intangible assets during 2015. The Company utilized Level 3 inputs to measure the fair value of goodwill and the intangible assets. New Accounting Pronouncements Leases In February 2016, the FASB issued an accounting standards update which replaces the current lease accounting standard. The update will require, among other items, lessees to recognize a right-of-use asset and a lease liability for most leases. Extensive quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing contracts. The update is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are currently evaluating the effect the update will have on our consolidated financial statements. Balance Sheet Classification of Deferred Taxes In November 2015, the FASB issued an accounting standards update which simplifies the presentation of deferred income taxes by requiring that deferred income tax liabilities and assets be classified as noncurrent in a classified statement of financial position. As permitted, the Company early adopted the update beginning in the fourth quarter of fiscal 2015 utilizing prospective application and prior periods were not retrospectively adjusted. The impact of this update was a reclassification of $11.0 million of short-term deferred income tax assets from Prepaid expenses and other current assets to Long-term deferred tax assets as of January 30, 2016. Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This ASU provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement includes a software license, the customer would account for fees related to the software license element consistent with accounting for the acquisition of other acquired software licenses. If the arrangement does not contain a software license, the customer would account for the arrangement as a service contract. As permitted, the Company early adopted this update prospectively beginning in the fourth quarter of fiscal 2015. As discussed in Note 10, based on an evaluation of this guidance and existing accounting literature, SHO reclassed a large majority of these investments that began in the first quarter of 2015 from capitalized assets to expense, and will expense most of these investments going forward as services are provided. Debt Issuance Costs In April 2015, the FASB issued an accounting standards update which simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with discounts or premiums. In August 2015, the FASB issued an accounting standards update about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements, and allows for the presentation of debt issuance costs as an asset regardless of whether or not there is an outstanding balance on the line-of-credit arrangement. The Company continued to report unamortized debt issuance costs related to the Senior ABL Facility of $1.1 million and $1.8 million at January 30, 2016 and January 31, 2015, respectively, within other assets. Consolidation In February 2015, the 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 became effective for the Company in the first quarter of 2015. The adoption of the new standard did not 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 became effective for the Company in the first quarter of 2015. The adoption of the new standard did not 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. After the FASB's August 2015 update to defer the effective date one year, this update will be effective for the Company in the first quarter of 2018 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. |
Accounts and Franchisee Receiva
Accounts and Franchisee Receivables and Other Assets | 12 Months Ended |
Jan. 30, 2016 | |
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: thousands January 30, 2016 January 31, 2015 Short-term franchisee receivables $ 2,376 $ 9,821 Miscellaneous receivables 10,754 8,856 Long-term franchisee receivables 23,068 49,330 Other assets 1,677 2,263 Allowance for losses on short-term franchisee receivables (1) (1,377 ) (3,221 ) Allowance for losses on long-term franchisee receivables (1) (10,764 ) (8,147 ) Total Accounts and franchisee receivables and other assets $ 25,734 $ 58,902 (1) The Company recognizes an allowance for losses on franchisee receivables (which consist primarily of franchisee promissory notes) in an amount equal to estimated probable losses net of recoveries. The allowance 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 allowance 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 an allowance for losses on franchisee receivables in 2014 and 2015 based on our receivable-by-receivable assessment during the year that some of the franchisee receivables were potentially uncollectible in future periods due to declining results of operations of, or other adverse financial events with respect to, franchise stores that indicated that the franchisees might not be able, or were unable or unwilling, to meet their debt-service and other obligations to us as they became due. |
Allowance for Losses on Franchi
Allowance for Losses on Franchisee Receivables | 12 Months Ended |
Jan. 30, 2016 | |
Receivables [Abstract] | |
ALLOWANCE FOR LOSSES ON FRANCHISEE RECEIVABLES | FOR LOSSES ON FRANCHISEE RECEIVABLES The allowance for losses on Franchisee Receivables, which was established in fiscal 2014, consists of the following: thousands January 30, 2016 January 31, 2015 Allowance for losses on franchisee receivables, beginning of period $ 11,368 $ — Expense during the period 25,426 13,055 Write off of franchisee receivables (24,653 ) (1,687 ) Allowance for losses on franchisee receivables, end of period $ 12,141 $ 11,368 |
Other Current and Long-Term Lia
Other Current and Long-Term Liabilities | 12 Months Ended |
Jan. 30, 2016 | |
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 January 30, 2016 January 31, 2015 Customer deposits $ 24,259 $ 30,241 Sales and other taxes 12,880 12,458 Accrued expenses 23,865 16,588 Payroll and related items 6,563 4,072 Store closing, severance and executive transition costs 1,569 — Total Other current and long-term liabilities $ 69,136 $ 63,359 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Jan. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | GOODWILL AND INTANGIBLE ASSETS Goodwill We recorded a $167.0 million non-cash goodwill impairment charge in the third quarter of fiscal 2014. We reviewed 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 indicated the carrying value of goodwill might not be recoverable. The goodwill impairment test involved a two-step process. In the first step, SHO compared the fair value of the Hometown Reporting Unit to its carrying value. If the fair value of the Hometown Reporting Unit exceeded its carrying value, goodwill was not impaired and no further testing was required. If the fair value of the Hometown Reporting Unit was less than its carrying value, SHO performed 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 was 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 was less than its carrying value, the difference was 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 change. 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 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 projected corresponding impact beyond those periods. Intangible assets Intangible assets consist of the following: thousands January 30, 2016 January 31, 2015 Reacquisition rights $ 6,100 $ — Less: accumulated amortization expense (1,723 ) — Total intangible assets, net $ 4,377 $ — In the fourth quarter of 2015 the Company repurchased a total of 58 franchised locations. These repurchase transactions included the execution of definitive asset purchase and termination agreements which terminated the franchise agreements and sublease arrangements for those locations. These definitive agreements also required the Company to purchase store furniture, fixtures, and equipment. The franchisees of the affected locations were obligors on promissory notes payable to the Company and as part of the definitive agreements, the Company wrote-off the franchisee note receivable balances net of the value of the reacquisition rights and the value of the furniture, fixtures, and equipment that the Company purchased. Reacquisition rights were recorded at estimated fair value using the income approach. Reacquisition rights are definite-life assets, and as such, we record amortization expense based on a method that most appropriately reflects our expected cash flows from these assets with a weighted-average amortization period of 2.3 years. Amortization expense for reacquisition rights was $1.7 million and $0 for the years ended January 30, 2016 and January 31, 2015, respectively. Amortization expense is estimated to be $2.7 million in 2016, $1.3 million in 2017, $0.3 million in 2018, and $0.1 million in 2019. |
Income Taxes
Income Taxes | 12 Months Ended |
Jan. 30, 2016 | |
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 2015, 2014 and 2013, 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. In 2015, a property that was not included in the 2012 valuation was revalued to its estimated 2012 fair market value. The increase in tax basis related to this property was recorded in 2015 as an increase to deferred tax assets of $7.6 million with the offset reflected as an equity contribution. Because this non-cash adjustment only impacts the balance sheet in each of the years it was unrecorded and its impact is not material to the consolidated financial statements based on management’s assessment of SEC Staff Accounting Bulletin No. 99, this correction was recorded in 2015 and no prior periods were adjusted. The provisions for income tax expense for 2015, 2014 and 2013 consist of the following: Fiscal Year Ended thousands 2015 2014 2013 Income (loss) before income taxes: U.S. $ (41,643 ) $ (172,829 ) $ 58,713 Foreign (770 ) 958 1,170 Total $ (42,413 ) $ (171,871 ) $ 59,883 Income tax expense (benefit): Current: Federal $ (9,758 ) $ 2,872 $ 3,808 State 605 608 1,341 Foreign 432 584 570 Total (8,721 ) 4,064 5,719 Deferred: Federal (4,666 ) (6,037 ) 15,859 State (1,765 ) (1,093 ) 2,847 Foreign — — (92 ) Total $ (6,431 ) $ (7,130 ) $ 18,614 Income tax expense (benefit) $ (15,152 ) $ (3,066 ) $ 24,333 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 2015 2014 2013 Federal tax rate 35.0 % 35.0 % 35.0 % State income tax (net of federal benefit) 1.8 % 0.2 % 4.5 % Goodwill — % (34.0 )% — % Valuation allowance (1.6 )% 0.1 % 0.4 % Other 0.5 % 0.5 % 0.7 % Effective tax rate 35.7 % 1.8 % 40.6 % The major components of the deferred tax assets and liabilities as of January 30, 2016 and January 31, 2015 are as follows: Fiscal Year Ended thousands January 30, 2016 January 31, 2015 Deferred tax assets Bad Debts $ 4,735 $ 4,412 Capital Leases — 17 Deferred Compensation 1,454 548 Deferred Rent 53 2,180 Favorable Leases 529 105 Inventory 4,100 1,579 Net Operating Loss 9,873 — Property 4,986 — Property Taxes 179 1,108 Royalty-free License 48,513 53,023 Other 6,302 5,008 Sub-total deferred tax assets $ 80,724 $ 67,980 Valuation allowance (830 ) (137 ) Total deferred tax assets $ 79,894 $ 67,843 Deferred tax liabilities Property — (1,936 ) Other (753 ) (751 ) Total deferred tax liabilities (753 ) (2,687 ) Net deferred tax assets $ 79,141 $ 65,156 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. For the majority of our deferred tax assets, which are U.S. based, management continues to monitor its operating performance and currently believes that the achievement of the required future taxable income necessary to realize these deferred assets is more-likely-than-not. Key considerations in this assessment include our cumulative pre-tax profit during the past three years, excluding non-deductible goodwill, and the extensive period of time available to generate future taxable income. It is reasonably possible that this belief could change in the near term requiring the establishment of additional valuation allowances which could significantly impact our operating results. A significant piece of negative evidence evaluated concerned the estimated future foreign taxable income available to use the foreign tax credit and the Puerto Rico AMT credit carryforward deferred tax assets of $ 1.4 million . On the basis of this analysis, for the years ended January 30, 2016 and January 31, 2015, a valuation allowance of $0.8 million and $0.1 million , respectively, was recognized to reduce this deferred tax asset since it does not meet the more-likely-than-not standard for realization. For the year ended January 30, 2016, the valuation allowance was increased by $0.7 million through tax expense 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. At the end of 2015, we had a federal net operating loss (“NOL”) of $22.7 million which will expire in 2036. At the end of 2015 and 2014, we had state NOLs of $2.9 million and $0.3 million , respectively, which will expire between 2019 and 2036. We have credit carryforwards of $1.5 million which will expire between 2023 and 2036. |
Related Party Agreements and Tr
Related Party Agreements and Transactions | 12 Months Ended |
Jan. 30, 2016 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY AGREEMENTS AND TRANSACTIONS | RELATED-PARTY AGREEMENTS AND TRANSACTIONS According to publicly available information, ESL beneficially owns approximately 51% of our outstanding shares of common stock and approximately 57% 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 30, 2016, products which we acquired from Sears Holdings, including KCD Products and other products, accounted for approximately 82% of our total purchases of inventory from all vendors with a comparable level of purchases from Sears Holdings in 2014 and 2013. 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 our 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 30, January 31, February 1, thousands Net Commissions from Sears Holdings Corporation $ 91,291 $ 99,054 $ 90,085 Purchases related to cost of sales and occupancy 1,386,414 1,499,231 1,597,716 Services included in selling and administrative 88,486 96,027 115,740 We incur payables to Sears Holdings for merchandise inventory purchases and service and occupancy charges (net of commissions) based on the SHO-Sears Holdings agreements. Amounts due to or from Sears Holding are non-interest bearing and are settled on a net basis. We generally pay undisputed amounts within 10 days after the invoice date. During our 2015 fiscal year we paid Seritage Growth Properties $0.5 million for occupancy charges for three properties we lease from Seritage. Edward S. Lampert is the Chairman of the Board of Trustees of Seritage. |
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 30, 2016 we had $68.3 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 30, 2016 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 30, 2016 was $176.0 million , with $5.7 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 2.43% at January 30, 2016 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 4.50% at January 30, 2016. 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 30, 2016 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. As of January 30, 2016, SHO was in compliance with all covenants under the Senior ABL Facility. 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. 30, 2016 | |
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 $(0.1) million , $0.3 million and $5.5 million from Hometown in 2015, 2014 and 2013, respectively, and $0.4 million , $16.6 million and $20.1 million from Outlet in 2015, 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. Selling and administrative expense includes losses on franchisee notes receivables and IT transformation costs of $20.1 million , $13.0 million and $0 for Hometown in 2015, 2014 and 2013, respectively, and $16.2 million , $0.1 million and $0 for Outlet in 2015, 2014 and 2013, respectively. 2015 thousands Hometown Outlet Total Net sales Appliances $ 1,056,175 $ 529,083 $ 1,585,258 Lawn and garden 286,222 22,166 308,388 Tools and paint 183,591 17,850 201,441 Other 104,288 88,413 192,701 Total 1,630,276 657,512 2,287,788 Costs and expenses Cost of sales and occupancy 1,262,215 507,071 1,769,286 Selling and administrative 378,141 167,987 546,128 Depreciation 5,568 8,978 14,546 Gain on the sale of assets — — — Total 1,645,924 684,036 2,329,960 Operating income (loss) $ (15,648 ) $ (26,524 ) $ (42,172 ) Total assets $ 421,615 $ 212,218 $ 633,833 Capital expenditures $ 4,563 $ 6,867 $ 11,430 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 $ (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 |
Quarterly Financial Data
Quarterly Financial Data | 12 Months Ended |
Jan. 30, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL DATA | QUARTERLY FINANCIAL DATA (UNAUDITED) Revision of Prior Period Interim Financial Statements In the fourth quarter of 2015, the Company reevaluated and identified an error in its accounting for the previously announced IT transformation project that began in the first quarter of 2015. This error was identified by considering the existing literature in ASC 350-40, “Goodwill - Intangibles and Other - Internal - Use Software,” and the recently issued FASB update, ASU 2015-05, “Intangibles -- Goodwill and Other - Internal Use Software, Customer's Accounting For Fees Paid in a Cloud Computing Arrangement.” Based on this evaluation the Company determined that the IT transformation costs are more appropriately accounted for under a service model, where costs are expensed as services are provided rather than capitalized. Accordingly, in the fourth quarter of 2015, the Company corrected its accounting by expensing $6.3 million of IT transformation costs that had been previously capitalized during the first three quarters of 2015. Transformation costs capitalized in each of the first, second and third quarters in the year ended January 30, 2016 were $1.2 million , $2.7 million and $2.4 million respectively; no similar costs were incurred in prior years. In accordance with the SEC’s Staff Accounting Bulletin (“SAB”) No. 99, the Company assessed the materiality of these errors and determined that for each of the quarters in the year ended January 30, 2016 the errors were immaterial. The Company further assessed the materiality of these errors to each of its previously reported 2015 interim financial statements in accordance with the SAB No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements," and concluded that the errors were not material to any of those periods as previously reported. The Company also concluded that, had the errors been restated within the fourth quarter of 2015, the impact of such adjustments could potentially be material to that period. As such, the following tables reflect the correction of our unaudited quarterly consolidated statements of operations and certain balance sheet and cash flow amounts for the periods indicated. Fiscal Year Ended January 30, 2016 First Quarter (three months ended May 2, 2015) Second Quarter (three months ended August 1, 2015) Third Quarter (three months ended October 31, 2015) Fourth Quarter (three months ended January 30, 2016) thousands, except per share amounts As reported Change Restated As reported Change Restated As reported Change Restated NET SALES $ 582,769 $ — $ 582,769 $ 619,610 $ — $ 619,610 $ 547,143 $ — $ 547,143 $ 538,266 COSTS AND EXPENSES Cost of sales and occupancy 442,410 — 442,410 478,250 — 478,250 429,361 — 429,361 419,265 Selling and administrative 134,502 1,208 135,710 136,223 2,697 138,920 123,030 2,379 125,409 146,089 Depreciation 1,861 — 1,861 2,164 — 2,164 2,221 50 2,271 8,250 Total costs and expenses 578,773 1,208 579,981 616,637 2,697 619,334 554,612 2,429 557,041 573,604 Operating income (loss) 3,996 (1,208 ) 2,788 2,973 (2,697 ) 276 (7,469 ) (2,429 ) (9,898 ) (35,338 ) Interest expense (781 ) — (781 ) (614 ) — (614 ) (587 ) — (587 ) (844 ) Other income 682 — 682 560 — 560 721 — 721 622 Income (loss) before income taxes 3,897 (1,208 ) 2,689 2,919 (2,697 ) 222 (7,335 ) (2,429 ) (9,764 ) (35,560 ) Income tax benefit (expense) (1,747 ) 350 (1,397 ) (1,409 ) 782 (627 ) 3,517 704 4,221 12,955 NET INCOME (LOSS) $ 2,150 $ (858 ) $ 1,292 $ 1,510 $ (1,915 ) $ (405 ) $ (3,818 ) $ (1,725 ) $ (5,543 ) $ (22,605 ) NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS Basic: $ 0.09 $ (0.03 ) $ 0.06 $ 0.07 $ (0.09 ) $ (0.02 ) $ (0.17 ) $ (0.07 ) $ (0.24 ) $ (1.00 ) Diluted: $ 0.09 $ (0.03 ) $ 0.06 $ 0.07 $ (0.09 ) $ (0.02 ) $ (0.17 ) $ (0.07 ) $ (0.24 ) $ (1.00 ) Basic weighted average common shares outstanding 22,666 — 22,666 22,666 — 22,666 22,666 — 22,666 22,666 Diluted weighted average common shares outstanding 22,666 — 22,666 22,666 — 22,666 22,666 — 22,666 22,666 Fiscal Year Ended January 30, 2016 First Quarter (as of May 2, 2015) Second Quarter (as of August 1, 2015) Third Quarter (as of October 31, 2015) Fourth Quarter (as of January 30, 2016) thousands, except per share amounts As reported Change Restated As reported Change Restated As reported Change Restated PROPERTY AND EQUIPMENT, net $ 50,613 $ (1,208 ) $ 49,405 $ 52,841 $ (3,905 ) $ 48,936 $ 59,207 $ (6,334 ) $ 52,873 $ 49,315 TOTAL ASSETS 655,270 (1,208 ) 654,062 636,039 (3,905 ) 632,134 660,258 (6,334 ) 653,924 633,833 LIABILITIES CURRENT LIABILITIES Other current liabilities 73,119 (350 ) 72,769 76,887 (1,132 ) 75,755 61,695 (1,836 ) 59,859 66,466 Total current liabilities 229,100 (350 ) 228,750 208,228 (1,132 ) 207,096 236,075 (1,836 ) 234,239 228,654 TOTAL LIABILITIES 231,241 (350 ) 230,891 210,492 (1,132 ) 209,360 238,366 (1,836 ) 236,530 231,324 TOTAL STOCKHOLDERS' EQUITY 424,029 (858 ) 423,171 425,547 (2,773 ) 422,774 421,892 (4,498 ) 417,394 402,509 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 655,270 (1,208 ) 654,062 636,039 (3,905 ) 632,134 660,258 (6,334 ) 653,924 633,833 First Quarter (three months ended May 2, 2015) Second Quarter (six months ended August 1, 2015) Third Quarter (nine months ended October 31, 2015) CASH FLOWS FROM OPERATING ACTIVITIES Net Income (loss) $ 2,150 $ (858 ) $ 1,292 $ 3,660 $ (2,773 ) $ 887 $ (158 ) $ (4,498 ) $ (4,656 ) Depreciation 1,861 — 1,861 2,164 — 2,164 6,246 50 6,296 Other operating liabilities 10,383 (350 ) 10,033 13,181 (1,132 ) 12,049 3,756 (1,836 ) 1,920 Net cash provided by operating activities 63,825 (1,208 ) 62,617 84,092 (3,905 ) 80,187 52,519 (6,284 ) 46,235 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (2,078 ) 1,208 (870 ) (6,448 ) 3,905 (2,543 ) (13,426 ) 6,284 (7,142 ) Net cash used in investing activities (2,078 ) 1,208 (870 ) (6,448 ) 3,905 (2,543 ) (13,426 ) 6,284 (7,142 ) 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 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 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jan. 30, 2016 | |
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 and 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 (loss) per common share also includes the dilutive effect of potential common shares. 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 30, 2016 January 31, 2015 February 1, 2014 thousands except income per common share Basic weighted average shares 22,666 22,666 22,984 Dilutive effect of restricted stock — — 5 Diluted weighted average shares 22,666 22,666 22,989 Net income (loss) $ (27,261 ) $ (168,805 ) $ 35,550 Income (loss) per common share: Basic $ (1.20 ) $ (7.45 ) $ 1.55 Diluted $ (1.20 ) $ (7.45 ) $ 1.55 |
Equity
Equity | 12 Months Ended |
Jan. 30, 2016 | |
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 Company's Amended and Restated 2012 Stock Plan (the "Plan"). A total of 89,221 shares of restricted stock were granted under the Plan in the second quarter of 2013 to a group of eligible individuals (as defined in the Plan) and 14,000 shares of restricted stock were granted under the Plan to an eligible individual in the second quarter of 2015. All of the eligible individuals were employees of the Company at the time of the grants. As of January 30, 2016, 47,263 shares of the original grant of 89,221 shares of restricted stock had been forfeited. During the first quarter of 2015 the Company granted a total of 159,475 stock units under the Plan (all of which stock units are payable solely in cash based on our stock price at the vesting date) to a group of eligible individuals, all of whom were employees of the Company at the time of the grants. As of January 30, 2016, 28,237 stock units had been forfeited. The estimated amount due related to the stock units of $0.3 million is included in other current liabilities at January 30, 2016. We are authorized to grant stock options and to make other awards (in addition to restricted stock and stock units) to eligible participants pursuant to the Plan. The Company has made no stock-option awards under the Plan. Except for the 103,221 shares of restricted stock and the 159,475 stock units, the Company has made no grants or awards under the Plan. We do not currently have a broad-based program that provides for awards under the Plan on an annual basis. We account for stock-based compensation using the fair value method in accordance with accounting standards regarding share-based payment transactions. During the fiscal year we recorded $(0.1) million in total compensation expense for the remaining 55,958 shares of restricted stock, including the reversal of approximately $0.7 million of compensation expense related to severance and executive transition costs, and $0.3 million in total compensation expense for the remaining 131,238 stock units (none of which had vested as of January 30, 2016). At January 30, 2016 we had $0.3 million in total unrecognized compensation cost related to the remaining non-vested restricted stock, which cost we expect to recognize over approximately the next two years. At January 30, 2016, we had $0.7 million in total unrecognized compensation cost related to the remaining non-vested stock units, which cost we expect to recognize over approximately the next two years. The remaining 41,958 shares of restricted stock originally granted will vest, if at all, on May 16, 2016, and 14,000 shares of restricted stock granted in 2015 will vest, if at all, on July 10, 2017, in accordance with and subject to the terms and conditions of restricted-stock agreements (including forfeiture conditions) and the Plan. The fair value of these awards is equal to the market price of our common stock on the date of grant. Changes in restricted-stock awards for 2015 were as follows: 52 Weeks Ended January 30, 2016 (Shares in thousands) Shares Weighted-Average Fair Value on Date of Grant Beginning of year balance 70 $ 44.45 Granted 14 9.38 Vested — — Forfeited (28 ) 44.45 Balance at 1/30/2016 56 $ 35.68 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 30, 2016 the Senior ABL Facility prohibited cash dividends and the repurchase of our common stock. No shares were repurchased during fiscal years 2015 and 2014. 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 30, 2016 we had $12.5 million of remaining authorization under the repurchase program. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Jan. 30, 2016 | |
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 2015 2014 2013 401(k) Savings Plan $ 905 $ 1,137 $ 289 |
Background, and Basis of Pres21
Background, and Basis of Presentation and Significant Accounting Policies (Policies) | 12 Months Ended |
Jan. 30, 2016 | |
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. 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. We operate through two segments--our Sears Hometown and Hardware segment ("Hometown") and our Sears Outlet segment ("Outlet"). |
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 $12.1 million at January 30, 2016 and $11.4 million at January 31, 2015. 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 provides an allowance for losses on franchisee receivables (which consist primarily of franchisee promissory notes) in an amount equal to estimated probable losses net of recoveries. The allowance 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 allowance 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 $9.8 million at January 30, 2016 and $12.1 million at January 31, 2015. 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 $0.6 million higher at January 30, 2016 and $0.9 million higher at January 31, 2015. |
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 2015, 2014, or 2013 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 inventory markdowns associated with the closing. 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. |
Insurance Programs | Insurance Programs We maintain with third-party insurance companies our own insurance arrangements for exposures incurred 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 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 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 $71 million , $74 million and $67 million for 2015, 2014 and 2013, 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 $71 million , $74 million and $67 million for 2015, 2014 and 2013, 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 Generally Accepted Accounting Principles ("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, merchandise payables, accrued expenses (level 1), accounts and notes receivable, and short-term debt (level 2) 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 and recorded certain intangible assets during 2015. The Company utilized Level 3 inputs to measure the fair value of goodwill and the intangible assets. |
New Accounting Pronouncements | New Accounting Pronouncements Leases In February 2016, the FASB issued an accounting standards update which replaces the current lease accounting standard. The update will require, among other items, lessees to recognize a right-of-use asset and a lease liability for most leases. Extensive quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing contracts. The update is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are currently evaluating the effect the update will have on our consolidated financial statements. Balance Sheet Classification of Deferred Taxes In November 2015, the FASB issued an accounting standards update which simplifies the presentation of deferred income taxes by requiring that deferred income tax liabilities and assets be classified as noncurrent in a classified statement of financial position. As permitted, the Company early adopted the update beginning in the fourth quarter of fiscal 2015 utilizing prospective application and prior periods were not retrospectively adjusted. The impact of this update was a reclassification of $11.0 million of short-term deferred income tax assets from Prepaid expenses and other current assets to Long-term deferred tax assets as of January 30, 2016. Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This ASU provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement includes a software license, the customer would account for fees related to the software license element consistent with accounting for the acquisition of other acquired software licenses. If the arrangement does not contain a software license, the customer would account for the arrangement as a service contract. As permitted, the Company early adopted this update prospectively beginning in the fourth quarter of fiscal 2015. As discussed in Note 10, based on an evaluation of this guidance and existing accounting literature, SHO reclassed a large majority of these investments that began in the first quarter of 2015 from capitalized assets to expense, and will expense most of these investments going forward as services are provided. Debt Issuance Costs In April 2015, the FASB issued an accounting standards update which simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with discounts or premiums. In August 2015, the FASB issued an accounting standards update about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements, and allows for the presentation of debt issuance costs as an asset regardless of whether or not there is an outstanding balance on the line-of-credit arrangement. The Company continued to report unamortized debt issuance costs related to the Senior ABL Facility of $1.1 million and $1.8 million at January 30, 2016 and January 31, 2015, respectively, within other assets. Consolidation In February 2015, the 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 became effective for the Company in the first quarter of 2015. The adoption of the new standard did not 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 became effective for the Company in the first quarter of 2015. The adoption of the new standard did not 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. After the FASB's August 2015 update to defer the effective date one year, this update will be effective for the Company in the first quarter of 2018 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. |
Background, and Basis of Pres22
Background, and Basis of Presentation and Significant Accounting Policies (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Fiscal Period | The following fiscal periods are presented herein. Fiscal Year Ended Weeks 2015 January 30, 2016 52 2014 January 31, 2015 52 2013 February 1, 2014 52 |
Value of Property and Equipment | Property and equipment consists of the following: thousands January 30, 2016 January 31, 2015 Land $ 2,123 $ 1,981 Buildings and improvements 49,680 54,601 Furniture, fixtures and equipment 37,681 35,104 Capitalized leases 1,005 799 Total property and equipment 90,489 92,485 Less: accumulated depreciation (41,174 ) (41,777 ) Total property and equipment, net $ 49,315 $ 50,708 |
Schedule of Rent Expense | Rental expense for operating leases was as follows: Fiscal Year thousands 2015 2014 2013 Minimum rentals $ 63,336 $ 63,115 $ 57,679 Less-Sublease rentals (25,505 ) (28,457 ) (19,678 ) Total $ 37,831 $ 34,658 $ 38,001 |
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 2016 $ 124 $ 55,656 2017 145 44,173 2018 145 29,755 2019 92 17,319 2020 — 11,793 Thereafter — 14,687 Total Minimum Lease Payments 506 173,383 Less - Sublease Income on Leased Properties — (33,963 ) Net Minimum Lease Payments $ 506 $ 139,420 Less: Implicit Interest — Capital Lease Obligations 506 Less Current Portion of Capital Lease Obligations (124 ) Long-term Capital Lease Obligations $ 382 |
Accounts and Franchisee Recei23
Accounts and Franchisee Receivables and Other Assets (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Receivables [Abstract] | |
Schedule of accounts and franchisee receivables and other assets | Accounts and franchisee receivables and other assets consist of the following: thousands January 30, 2016 January 31, 2015 Short-term franchisee receivables $ 2,376 $ 9,821 Miscellaneous receivables 10,754 8,856 Long-term franchisee receivables 23,068 49,330 Other assets 1,677 2,263 Allowance for losses on short-term franchisee receivables (1) (1,377 ) (3,221 ) Allowance for losses on long-term franchisee receivables (1) (10,764 ) (8,147 ) Total Accounts and franchisee receivables and other assets $ 25,734 $ 58,902 (1) The Company recognizes an allowance for losses on franchisee receivables (which consist primarily of franchisee promissory notes) in an amount equal to estimated probable losses net of recoveries. The allowance 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 allowance 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 an allowance for losses on franchisee receivables in 2014 and 2015 based on our receivable-by-receivable assessment during the year that some of the franchisee receivables were potentially uncollectible in future periods due to declining results of operations of, or other adverse financial events with respect to, franchise stores that indicated that the franchisees might not be able, or were unable or unwilling, to meet their debt-service and other obligations to us as they became due. |
Allowance for Losses on Franc24
Allowance for Losses on Franchisee Receivables (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Receivables [Abstract] | |
Schedule of Allowance for Losses on Franchisee Receivables | The allowance for losses on Franchisee Receivables, which was established in fiscal 2014, consists of the following: thousands January 30, 2016 January 31, 2015 Allowance for losses on franchisee receivables, beginning of period $ 11,368 $ — Expense during the period 25,426 13,055 Write off of franchisee receivables (24,653 ) (1,687 ) Allowance for losses on franchisee receivables, end of period $ 12,141 $ 11,368 |
Other Current and Long-Term L25
Other Current and Long-Term Liabilities (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Long-term Liabilities | Other current and long-term liabilities consist of the following: thousands January 30, 2016 January 31, 2015 Customer deposits $ 24,259 $ 30,241 Sales and other taxes 12,880 12,458 Accrued expenses 23,865 16,588 Payroll and related items 6,563 4,072 Store closing, severance and executive transition costs 1,569 — Total Other current and long-term liabilities $ 69,136 $ 63,359 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consist of the following: thousands January 30, 2016 January 31, 2015 Reacquisition rights $ 6,100 $ — Less: accumulated amortization expense (1,723 ) — Total intangible assets, net $ 4,377 $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provisions for Income Tax Expense | The provisions for income tax expense for 2015, 2014 and 2013 consist of the following: Fiscal Year Ended thousands 2015 2014 2013 Income (loss) before income taxes: U.S. $ (41,643 ) $ (172,829 ) $ 58,713 Foreign (770 ) 958 1,170 Total $ (42,413 ) $ (171,871 ) $ 59,883 Income tax expense (benefit): Current: Federal $ (9,758 ) $ 2,872 $ 3,808 State 605 608 1,341 Foreign 432 584 570 Total (8,721 ) 4,064 5,719 Deferred: Federal (4,666 ) (6,037 ) 15,859 State (1,765 ) (1,093 ) 2,847 Foreign — — (92 ) Total $ (6,431 ) $ (7,130 ) $ 18,614 Income tax expense (benefit) $ (15,152 ) $ (3,066 ) $ 24,333 |
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 2015 2014 2013 Federal tax rate 35.0 % 35.0 % 35.0 % State income tax (net of federal benefit) 1.8 % 0.2 % 4.5 % Goodwill — % (34.0 )% — % Valuation allowance (1.6 )% 0.1 % 0.4 % Other 0.5 % 0.5 % 0.7 % Effective tax rate 35.7 % 1.8 % 40.6 % |
Schedule of Deferred Tax Assets and Liabilities | The major components of the deferred tax assets and liabilities as of January 30, 2016 and January 31, 2015 are as follows: Fiscal Year Ended thousands January 30, 2016 January 31, 2015 Deferred tax assets Bad Debts $ 4,735 $ 4,412 Capital Leases — 17 Deferred Compensation 1,454 548 Deferred Rent 53 2,180 Favorable Leases 529 105 Inventory 4,100 1,579 Net Operating Loss 9,873 — Property 4,986 — Property Taxes 179 1,108 Royalty-free License 48,513 53,023 Other 6,302 5,008 Sub-total deferred tax assets $ 80,724 $ 67,980 Valuation allowance (830 ) (137 ) Total deferred tax assets $ 79,894 $ 67,843 Deferred tax liabilities Property — (1,936 ) Other (753 ) (751 ) Total deferred tax liabilities (753 ) (2,687 ) Net deferred tax assets $ 79,141 $ 65,156 |
Related Party Agreements and 28
Related Party Agreements and Transactions (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
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 30, January 31, February 1, thousands Net Commissions from Sears Holdings Corporation $ 91,291 $ 99,054 $ 90,085 Purchases related to cost of sales and occupancy 1,386,414 1,499,231 1,597,716 Services included in selling and administrative 88,486 96,027 115,740 |
Summary of Segment Data (Tables
Summary of Segment Data (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Data | 2015 thousands Hometown Outlet Total Net sales Appliances $ 1,056,175 $ 529,083 $ 1,585,258 Lawn and garden 286,222 22,166 308,388 Tools and paint 183,591 17,850 201,441 Other 104,288 88,413 192,701 Total 1,630,276 657,512 2,287,788 Costs and expenses Cost of sales and occupancy 1,262,215 507,071 1,769,286 Selling and administrative 378,141 167,987 546,128 Depreciation 5,568 8,978 14,546 Gain on the sale of assets — — — Total 1,645,924 684,036 2,329,960 Operating income (loss) $ (15,648 ) $ (26,524 ) $ (42,172 ) Total assets $ 421,615 $ 212,218 $ 633,833 Capital expenditures $ 4,563 $ 6,867 $ 11,430 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 $ (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 |
Quarterly Financial Data (Table
Quarterly Financial Data (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data | Fiscal Year Ended January 30, 2016 First Quarter (three months ended May 2, 2015) Second Quarter (three months ended August 1, 2015) Third Quarter (three months ended October 31, 2015) Fourth Quarter (three months ended January 30, 2016) thousands, except per share amounts As reported Change Restated As reported Change Restated As reported Change Restated NET SALES $ 582,769 $ — $ 582,769 $ 619,610 $ — $ 619,610 $ 547,143 $ — $ 547,143 $ 538,266 COSTS AND EXPENSES Cost of sales and occupancy 442,410 — 442,410 478,250 — 478,250 429,361 — 429,361 419,265 Selling and administrative 134,502 1,208 135,710 136,223 2,697 138,920 123,030 2,379 125,409 146,089 Depreciation 1,861 — 1,861 2,164 — 2,164 2,221 50 2,271 8,250 Total costs and expenses 578,773 1,208 579,981 616,637 2,697 619,334 554,612 2,429 557,041 573,604 Operating income (loss) 3,996 (1,208 ) 2,788 2,973 (2,697 ) 276 (7,469 ) (2,429 ) (9,898 ) (35,338 ) Interest expense (781 ) — (781 ) (614 ) — (614 ) (587 ) — (587 ) (844 ) Other income 682 — 682 560 — 560 721 — 721 622 Income (loss) before income taxes 3,897 (1,208 ) 2,689 2,919 (2,697 ) 222 (7,335 ) (2,429 ) (9,764 ) (35,560 ) Income tax benefit (expense) (1,747 ) 350 (1,397 ) (1,409 ) 782 (627 ) 3,517 704 4,221 12,955 NET INCOME (LOSS) $ 2,150 $ (858 ) $ 1,292 $ 1,510 $ (1,915 ) $ (405 ) $ (3,818 ) $ (1,725 ) $ (5,543 ) $ (22,605 ) NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS Basic: $ 0.09 $ (0.03 ) $ 0.06 $ 0.07 $ (0.09 ) $ (0.02 ) $ (0.17 ) $ (0.07 ) $ (0.24 ) $ (1.00 ) Diluted: $ 0.09 $ (0.03 ) $ 0.06 $ 0.07 $ (0.09 ) $ (0.02 ) $ (0.17 ) $ (0.07 ) $ (0.24 ) $ (1.00 ) Basic weighted average common shares outstanding 22,666 — 22,666 22,666 — 22,666 22,666 — 22,666 22,666 Diluted weighted average common shares outstanding 22,666 — 22,666 22,666 — 22,666 22,666 — 22,666 22,666 Fiscal Year Ended January 30, 2016 First Quarter (as of May 2, 2015) Second Quarter (as of August 1, 2015) Third Quarter (as of October 31, 2015) Fourth Quarter (as of January 30, 2016) thousands, except per share amounts As reported Change Restated As reported Change Restated As reported Change Restated PROPERTY AND EQUIPMENT, net $ 50,613 $ (1,208 ) $ 49,405 $ 52,841 $ (3,905 ) $ 48,936 $ 59,207 $ (6,334 ) $ 52,873 $ 49,315 TOTAL ASSETS 655,270 (1,208 ) 654,062 636,039 (3,905 ) 632,134 660,258 (6,334 ) 653,924 633,833 LIABILITIES CURRENT LIABILITIES Other current liabilities 73,119 (350 ) 72,769 76,887 (1,132 ) 75,755 61,695 (1,836 ) 59,859 66,466 Total current liabilities 229,100 (350 ) 228,750 208,228 (1,132 ) 207,096 236,075 (1,836 ) 234,239 228,654 TOTAL LIABILITIES 231,241 (350 ) 230,891 210,492 (1,132 ) 209,360 238,366 (1,836 ) 236,530 231,324 TOTAL STOCKHOLDERS' EQUITY 424,029 (858 ) 423,171 425,547 (2,773 ) 422,774 421,892 (4,498 ) 417,394 402,509 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 655,270 (1,208 ) 654,062 636,039 (3,905 ) 632,134 660,258 (6,334 ) 653,924 633,833 First Quarter (three months ended May 2, 2015) Second Quarter (six months ended August 1, 2015) Third Quarter (nine months ended October 31, 2015) CASH FLOWS FROM OPERATING ACTIVITIES Net Income (loss) $ 2,150 $ (858 ) $ 1,292 $ 3,660 $ (2,773 ) $ 887 $ (158 ) $ (4,498 ) $ (4,656 ) Depreciation 1,861 — 1,861 2,164 — 2,164 6,246 50 6,296 Other operating liabilities 10,383 (350 ) 10,033 13,181 (1,132 ) 12,049 3,756 (1,836 ) 1,920 Net cash provided by operating activities 63,825 (1,208 ) 62,617 84,092 (3,905 ) 80,187 52,519 (6,284 ) 46,235 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (2,078 ) 1,208 (870 ) (6,448 ) 3,905 (2,543 ) (13,426 ) 6,284 (7,142 ) Net cash used in investing activities (2,078 ) 1,208 (870 ) (6,448 ) 3,905 (2,543 ) (13,426 ) 6,284 (7,142 ) 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 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 |
Income (loss) per Common Share
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 30, 2016 January 31, 2015 February 1, 2014 thousands except income per common share Basic weighted average shares 22,666 22,666 22,984 Dilutive effect of restricted stock — — 5 Diluted weighted average shares 22,666 22,666 22,989 Net income (loss) $ (27,261 ) $ (168,805 ) $ 35,550 Income (loss) per common share: Basic $ (1.20 ) $ (7.45 ) $ 1.55 Diluted $ (1.20 ) $ (7.45 ) $ 1.55 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Restricted Stock Award Activity | 52 Weeks Ended January 30, 2016 (Shares in thousands) Shares Weighted-Average Fair Value on Date of Grant Beginning of year balance 70 $ 44.45 Granted 14 9.38 Vested — — Forfeited (28 ) 44.45 Balance at 1/30/2016 56 $ 35.68 |
Defined Contribution Plan (Tabl
Defined Contribution Plan (Tables) | 12 Months Ended |
Jan. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of Defined Contribution Plan | Expenses for the retirement savings plan were as follows: thousands 2015 2014 2013 401(k) Savings Plan $ 905 $ 1,137 $ 289 |
Background, and Basis of Pres34
Background, and Basis of Presentation and Significant Accounting Policies (Narrative) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Jan. 31, 2015USD ($)storestate | Nov. 01, 2014USD ($) | Aug. 02, 2014USD ($) | May. 03, 2014USD ($) | Jan. 30, 2016USD ($) | Jan. 31, 2015USD ($)storesegmentstate | Feb. 01, 2014USD ($) | |
Background | |||||||
Number of stores | store | 1,160 | 1,160 | |||||
Number of states in which the Company operates | state | 50 | 50 | |||||
Basis of Presentation | |||||||
Number of operating segments | segment | 2 | ||||||
Fiscal Year | |||||||
Number of weeks in fiscal year | 364 days | ||||||
Allowance for Doubtful Accounts Receivable | |||||||
Allowance for doubtful accounts | $ 11,400 | $ 12,100 | $ 11,400 | ||||
Merchandise Inventories | |||||||
Inventory valuation reserves | 12,100 | 9,800 | 12,100 | ||||
FIFO inventory amount in excess of LIFO | 900 | 600 | 900 | ||||
Impairment of Long-Lived Assets and Costs Associated with Exit Activities | |||||||
Impairment of goodwill | 0 | $ 167,000 | $ 0 | $ 0 | 0 | 167,000 | $ 0 |
Insurance Programs | |||||||
Insurance expense | 4,000 | 6,000 | 7,000 | ||||
Reserve for Sales Returns and Allowances | |||||||
Reserve for returns and allowances | 1,000 | 2,000 | |||||
Dealer and Franchise Commissions | |||||||
Commission costs | 278,000 | 297,000 | 261,000 | ||||
Advertising Costs | |||||||
Advertising costs | 71,000 | 74,000 | $ 67,000 | ||||
Income Tax Contingency [Line Items] | |||||||
Reclassified deferred income tax assets | 54,273 | 79,141 | 54,273 | ||||
Unamortized debt issuance cost | $ 1,800 | 1,100 | $ 1,800 | ||||
New Accounting Pronouncement, Early Adoption, Effect [Member] | |||||||
Income Tax Contingency [Line Items] | |||||||
Reclassified deferred income tax assets | $ 11,000 |
Background, and Basis of Pres35
Background, and Basis of Presentation and Significant Accounting Policies (Property and Equipment) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Jan. 30, 2016 | Jan. 31, 2015 | Oct. 31, 2015 | Aug. 01, 2015 | May. 02, 2015 | |
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 90,489 | $ 92,485 | |||
Less: accumulated depreciation | (41,174) | (41,777) | |||
Total property and equipment, net | 49,315 | 50,708 | $ 52,873 | $ 48,936 | $ 49,405 |
Depreciation | 12,800 | 10,200 | |||
Carrying value of properties held for sale | 3,800 | ||||
Land [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 2,123 | 1,981 | |||
Buildings and Improvements [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 49,680 | 54,601 | |||
Furniture, Fixtures and Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 37,681 | 35,104 | |||
Capital Leases [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 1,005 | $ 799 | |||
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 Pres36
Background, and Basis of Presentation and Significant Accounting Policies (Leases) (Details) $ in Thousands | 12 Months Ended | ||
Jan. 30, 2016USD ($)location | Jan. 31, 2015USD ($) | Feb. 01, 2014USD ($) | |
Rent Expense | |||
Minimum rentals | $ 63,336 | $ 63,115 | $ 57,679 |
Less-Sublease rentals | (25,505) | (28,457) | (19,678) |
Total | 37,831 | 34,658 | 38,001 |
Capital Leases | |||
2,016 | 124 | ||
2,017 | 145 | ||
2,018 | 145 | ||
2,019 | 92 | ||
2,020 | 0 | ||
Thereafter | 0 | ||
Total Minimum Lease Payments | 506 | ||
Less - Sublease Income on Leased Properties | 0 | ||
Implicit Interest | 0 | ||
Capital Lease Obligations | 506 | ||
Less Current Portion of Capital Lease Obligations | (124) | ||
Long-term Capital Lease Obligations | 382 | ||
Operating Leases | |||
2,016 | 55,656 | ||
2,017 | 44,173 | ||
2,018 | 29,755 | ||
2,019 | 17,319 | ||
2,020 | 11,793 | ||
Thereafter | 14,687 | ||
Total Minimum Lease Payments | 173,383 | ||
Less - Sublease Income on Leased Properties | (33,963) | ||
Net Minimum Lease Payments | $ 139,420 | ||
Sears Holdings Corporation [Member] | |||
Related Party Transaction [Line Items] | |||
Number of sublease locations | location | 63 | ||
Sears Holdings Corporation [Member] | Rent Expense [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses paid to Sears Holdings | $ 19,300 | $ 27,800 | $ 27,300 |
Accounts and Franchisee Recei37
Accounts and Franchisee Receivables and Other Assets (Details) - USD ($) $ in Thousands | Jan. 30, 2016 | Jan. 31, 2015 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Short-term franchisee receivables | $ 2,376 | $ 9,821 |
Long-term franchisee receivables | 10,754 | 8,856 |
Long-term franchisee receivables | 23,068 | 49,330 |
Other assets | 1,677 | 2,263 |
Allowance for losses on short-term franchisee receivables (1) | (1,377) | (3,221) |
Allowance for losses on long-term franchisee receivables (1) | (10,764) | (8,147) |
Total Accounts and franchisee receivables and other assets | $ 25,734 | $ 58,902 |
Allowance for Losses on Franc38
Allowance for Losses on Franchisee Receivables (Details) - Franchise Receivable [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 30, 2016 | Jan. 31, 2015 | |
Provision for Losses on Franchisee Receivables [Roll Forward] | ||
Allowance for losses on franchisee receivables, beginning of period | $ 11,368 | $ 0 |
Expense during the period | 25,426 | 13,055 |
Write off of franchisee receivables | (24,653) | (1,687) |
Allowance for losses on franchisee receivables, end of period | $ 12,141 | $ 11,368 |
Other Current and Long-Term L39
Other Current and Long-Term Liabilities (Details) - USD ($) $ in Thousands | Jan. 30, 2016 | Jan. 31, 2015 |
Payables and Accruals [Abstract] | ||
Customer deposits | $ 24,259 | $ 30,241 |
Sales and other taxes | 12,880 | 12,458 |
Accrued expenses | 23,865 | 16,588 |
Payroll and related items | 6,563 | 4,072 |
Store closing, severance and executive transition costs | 1,569 | 0 |
Total Other current and long-term liabilities | $ 69,136 | $ 63,359 |
Goodwill and Intangible Asset40
Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Jan. 31, 2015 | Nov. 01, 2014 | Aug. 02, 2014 | May. 03, 2014 | Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | |
Goodwill [Line Items] | |||||||
Impairment Loss | $ 0 | $ (167,000,000) | $ 0 | $ 0 | $ 0 | $ (167,000,000) | $ 0 |
Sears Outlet [Member] | |||||||
Goodwill [Line Items] | |||||||
Impairment Loss | 0 | ||||||
Sears Hometown [Member] | |||||||
Goodwill [Line Items] | |||||||
Balance (gross) at February 1, 2014 | $ 0 | ||||||
Impairment Loss | (167,000,000) | ||||||
Balance at January 31, 2015 | $ 0 | $ 0 |
Goodwill and Intangible Asset41
Goodwill and Intangible Assets (Intangible Assets) (Details) | 3 Months Ended | 12 Months Ended | |
Jan. 30, 2016USD ($)location | Jan. 30, 2016USD ($) | Jan. 31, 2015USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||
Total intangible assets, net | $ 4,377,000 | $ 4,377,000 | $ 0 |
2,019 | 100,000 | 100,000 | |
Reacquisition Rights [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Reacquisition rights | 6,100,000 | 6,100,000 | 0 |
Less: accumulated amortization expense | (1,723,000) | (1,723,000) | 0 |
Total intangible assets, net | $ 4,377,000 | $ 4,377,000 | 0 |
Franchise locations repurchased | location | 58 | ||
Weighted-average amortization period | 2 years 3 months 18 days | ||
Amortization expense | $ 1,700,000 | $ 0 | |
2,016 | $ 2,700,000 | 2,700,000 | |
2,017 | 1,300,000 | 1,300,000 | |
2,018 | $ 300,000 | $ 300,000 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | Aug. 31, 2012 | Jan. 30, 2016 | Jan. 31, 2015 |
Income Tax Disclosure [Abstract] | |||
Increase in deferred tax asset | $ 80,400 | $ 7,600 | |
Tax credit carryforwards, foreign | 1,400 | ||
Valuation allowance | 830 | $ 137 | |
Decrease in valuation allowance | 700 | ||
Operating Loss Carryforwards [Line Items] | |||
Federal and state net operating loss deferred tax asset | 9,873 | 0 | |
Credit carryforward | 1,500 | ||
Domestic Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Federal and state net operating loss deferred tax asset | 22,700 | ||
State and Local Jurisdiction [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Federal and state net operating loss deferred tax asset | $ 2,900 | $ 300 |
Income Taxes (Provisions for In
Income Taxes (Provisions for Income Tax Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 30, 2016 | Oct. 31, 2015 | Aug. 01, 2015 | May. 02, 2015 | Jan. 31, 2015 | Nov. 01, 2014 | Aug. 02, 2014 | May. 03, 2014 | Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | |
Income (loss) before income taxes: | |||||||||||
U.S. | $ (41,643) | $ (172,829) | $ 58,713 | ||||||||
Foreign | (770) | 958 | 1,170 | ||||||||
Income (loss) before income taxes | $ (35,560) | $ (9,764) | $ 222 | $ 2,689 | $ (10,027) | $ (173,611) | $ 5,689 | $ 6,078 | (42,413) | (171,871) | 59,883 |
Current: | |||||||||||
Federal | (9,758) | 2,872 | 3,808 | ||||||||
State | 605 | 608 | 1,341 | ||||||||
Foreign | 432 | 584 | 570 | ||||||||
Total | (8,721) | 4,064 | 5,719 | ||||||||
Deferred: | |||||||||||
Federal | (4,666) | (6,037) | 15,859 | ||||||||
State | (1,765) | (1,093) | 2,847 | ||||||||
Foreign | 0 | 0 | (92) | ||||||||
Total | (6,431) | (7,130) | 18,614 | ||||||||
Income tax expense (benefit) | $ (12,955) | $ (4,221) | $ 627 | $ 1,397 | $ (5,393) | $ (2,401) | $ 2,329 | $ 2,399 | $ (15,152) | $ (3,066) | $ 24,333 |
Income Taxes (Income Tax Rate R
Income Taxes (Income Tax Rate Reconciliation) (Details) | 12 Months Ended | ||
Jan. 30, 2016 | 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) | 1.80% | 0.20% | 4.50% |
Goodwill | 0.00% | (34.00%) | 0.00% |
Valuation allowance | (1.60%) | 0.10% | 0.40% |
Other | 0.50% | 0.50% | 0.70% |
Effective tax rate | 35.70% | 1.80% | 40.60% |
Income Taxes (Deferred Tax Asse
Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Jan. 30, 2016 | Jan. 31, 2015 |
Deferred tax assets | ||
Bad Debts | $ 4,735 | $ 4,412 |
Capital Leases | 0 | 17 |
Deferred Compensation | 1,454 | 548 |
Deferred Rent | 53 | 2,180 |
Favorable Leases | 529 | 105 |
Inventory | 4,100 | 1,579 |
Net Operating Loss | 9,873 | 0 |
Property | 4,986 | 0 |
Property Taxes | 179 | 1,108 |
Royalty-free License | 48,513 | 53,023 |
Other | 6,302 | 5,008 |
Sub-total deferred tax assets | 80,724 | 67,980 |
Valuation allowance | (830) | (137) |
Total deferred tax assets | 79,894 | 67,843 |
Deferred tax liabilities | ||
Property | 0 | (1,936) |
Other | (753) | (751) |
Total deferred tax liabilities | (753) | (2,687) |
Net deferred tax assets | $ 79,141 | $ 65,156 |
Related Party Agreements and 46
Related Party Agreements and Transactions (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jan. 30, 2016USD ($)property | Jan. 30, 2016USD ($)property | Jan. 31, 2015USD ($)store | Feb. 01, 2014USD ($) | |
Related Party Transactions and Concentration of Risk [Line Items] | ||||
Number of properties leased | store | 1,160 | |||
ESL [Member] | ||||
Related Party Transactions and Concentration of Risk [Line Items] | ||||
Beneficial interest acquired by related party, percentage | 51.00% | 51.00% | ||
Affiliated Entity | ||||
Related Party Transactions and Concentration of Risk [Line Items] | ||||
Net Commissions from Sears Holdings Corporation | $ 91,291 | $ 99,054 | $ 90,085 | |
Purchases related to cost of sales and occupancy | 1,386,414 | 1,499,231 | 1,597,716 | |
Services included in selling and administrative | $ 88,486 | $ 96,027 | $ 115,740 | |
Invoice payment term | 10 days | |||
Cost of Inventory [Member] | Supplier Concentration Risk [Member] | Affiliated Entity | ||||
Related Party Transactions and Concentration of Risk [Line Items] | ||||
Percentage of total purchases of inventory | 82.00% | |||
Sears Holdings [Member] | ESL [Member] | ||||
Related Party Transactions and Concentration of Risk [Line Items] | ||||
Beneficial interest acquired by related party, percentage | 57.00% | 57.00% | ||
Seritage Growth Properties [Member] | Affiliated Entity | ||||
Related Party Transactions and Concentration of Risk [Line Items] | ||||
Payments for Rent | $ 500 | |||
Number of properties leased | property | 3 | 3 |
Financing Arrangements (Details
Financing Arrangements (Details) - Senior ABL Facility [Member] | 12 Months Ended | ||
Jan. 30, 2016USD ($) | Jan. 31, 2015 | Oct. 11, 2012USD ($) | |
Debt Instrument [Line Items] | |||
Aggregate maximum borrowings | $ 250,000,000 | ||
Amount outstanding | $ 100,000,000 | ||
Remaining borrowing capacity | $ 68,300,000 | ||
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 | 5,700,000 | ||
Remaining borrowing capacity | 176,000,000 | ||
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 | 2.43% | ||
Base Rate [Member] | |||
Debt Instrument [Line Items] | |||
Variable rate | 4.50% |
Summary of Segment Data (Detail
Summary of Segment Data (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Jan. 30, 2016 | Oct. 31, 2015 | Aug. 01, 2015 | May. 02, 2015 | Jan. 31, 2015 | Nov. 01, 2014 | Aug. 02, 2014 | May. 03, 2014 | Aug. 01, 2015 | Oct. 31, 2015 | Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | |
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | $ 538,266,000 | $ 547,143,000 | $ 619,610,000 | $ 582,769,000 | $ 562,339,000 | $ 565,147,000 | $ 638,693,000 | $ 589,854,000 | $ 2,287,788,000 | $ 2,356,033,000 | $ 2,421,562,000 | ||
Cost of sales and occupancy | 419,265,000 | 429,361,000 | 478,250,000 | 442,410,000 | 435,853,000 | 430,085,000 | 491,604,000 | 445,955,000 | 1,769,286,000 | 1,803,497,000 | 1,843,418,000 | ||
Selling and administrative | 146,089,000 | 125,409,000 | 138,920,000 | 135,710,000 | 132,365,000 | 139,766,000 | 139,226,000 | 135,279,000 | 546,128,000 | 546,636,000 | 506,630,000 | ||
Impairment of goodwill | 0 | 167,000,000 | 0 | 0 | 0 | 167,000,000 | 0 | ||||||
Depreciation | 8,250,000 | 2,271,000 | 2,164,000 | 1,861,000 | 3,782,000 | 2,035,000 | 2,067,000 | 2,288,000 | $ 2,164,000 | $ 6,296,000 | 14,546,000 | 10,172,000 | 12,006,000 |
Gain on the sale of assets | 42,000 | (155,000) | 0 | 0 | 0 | (113,000) | (1,567,000) | ||||||
Total costs and expenses | 573,604,000 | 557,041,000 | 619,334,000 | 579,981,000 | 572,042,000 | 738,731,000 | 632,897,000 | 583,522,000 | 2,329,960,000 | 2,527,192,000 | 2,360,487,000 | ||
Operating income (loss) | (35,338,000) | (9,898,000) | 276,000 | 2,788,000 | (9,703,000) | $ (173,584,000) | $ 5,796,000 | $ 6,332,000 | (42,172,000) | (171,159,000) | 61,075,000 | ||
Total assets | 633,833,000 | $ 653,924,000 | $ 632,134,000 | 654,062,000 | 645,722,000 | 632,134,000 | 653,924,000 | 633,833,000 | 645,722,000 | 847,185,000 | |||
Capital expenditures | $ 870,000 | $ 2,543,000 | $ 7,142,000 | 11,430,000 | 12,849,000 | 10,704,000 | |||||||
Appliances [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 1,585,258,000 | 1,578,361,000 | 1,639,329,000 | ||||||||||
Lawn and Garden [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 308,388,000 | 339,022,000 | 343,468,000 | ||||||||||
Tools and Paint[Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 201,441,000 | 222,588,000 | 228,249,000 | ||||||||||
Other [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 192,701,000 | 216,062,000 | 210,516,000 | ||||||||||
Sears Hometown [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Initial franchise revenue | (100,000) | 300,000 | 5,500,000 | ||||||||||
Net sales | 1,630,276,000 | 1,692,377,000 | 1,811,519,000 | ||||||||||
Cost of sales and occupancy | 1,262,215,000 | 1,297,212,000 | 1,389,627,000 | ||||||||||
Selling and administrative | 378,141,000 | 403,367,000 | 396,073,000 | ||||||||||
Impairment of goodwill | 167,000,000 | ||||||||||||
Depreciation | 5,568,000 | 3,817,000 | 6,321,000 | ||||||||||
Gain on the sale of assets | 0 | (113,000) | 0 | ||||||||||
Total costs and expenses | 1,645,924,000 | 1,871,283,000 | 1,792,021,000 | ||||||||||
Operating income (loss) | (15,648,000) | (178,906,000) | 19,498,000 | ||||||||||
Total assets | 421,615,000 | 430,128,000 | 421,615,000 | 430,128,000 | 632,437,000 | ||||||||
Capital expenditures | 4,563,000 | 3,046,000 | 3,731,000 | ||||||||||
Loss on franchisee notes receivable and IT transformation costs | 20,100,000 | 13,000,000 | 0 | ||||||||||
Sears Hometown [Member] | Appliances [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 1,056,175,000 | 1,056,114,000 | 1,160,894,000 | ||||||||||
Sears Hometown [Member] | Lawn and Garden [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 286,222,000 | 316,725,000 | 319,725,000 | ||||||||||
Sears Hometown [Member] | Tools and Paint[Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 183,591,000 | 204,117,000 | 213,575,000 | ||||||||||
Sears Hometown [Member] | Other [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 104,288,000 | 115,421,000 | 117,325,000 | ||||||||||
Sears Outlet [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Initial franchise revenue | 400,000 | 16,600,000 | 20,100,000 | ||||||||||
Net sales | 657,512,000 | 663,656,000 | 610,043,000 | ||||||||||
Cost of sales and occupancy | 507,071,000 | 506,285,000 | 453,791,000 | ||||||||||
Selling and administrative | 167,987,000 | 143,269,000 | 110,557,000 | ||||||||||
Impairment of goodwill | 0 | ||||||||||||
Depreciation | 8,978,000 | 6,355,000 | 5,685,000 | ||||||||||
Gain on the sale of assets | 0 | 0 | (1,567,000) | ||||||||||
Total costs and expenses | 684,036,000 | 655,909,000 | 568,466,000 | ||||||||||
Operating income (loss) | (26,524,000) | 7,747,000 | 41,577,000 | ||||||||||
Total assets | $ 212,218,000 | $ 215,594,000 | 212,218,000 | 215,594,000 | 214,748,000 | ||||||||
Capital expenditures | 6,867,000 | 9,803,000 | 6,973,000 | ||||||||||
Loss on franchisee notes receivable and IT transformation costs | 16,200,000 | 100,000 | 0 | ||||||||||
Sears Outlet [Member] | Appliances [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 529,083,000 | 522,247,000 | 478,435,000 | ||||||||||
Sears Outlet [Member] | Lawn and Garden [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 22,166,000 | 22,297,000 | 23,743,000 | ||||||||||
Sears Outlet [Member] | Tools and Paint[Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | 17,850,000 | 18,471,000 | 14,674,000 | ||||||||||
Sears Outlet [Member] | Other [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net sales | $ 88,413,000 | $ 100,641,000 | $ 93,191,000 |
Quarterly Financial Data (Detai
Quarterly Financial Data (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Jan. 30, 2016 | Oct. 31, 2015 | Aug. 01, 2015 | May. 02, 2015 | Jan. 31, 2015 | Nov. 01, 2014 | Aug. 02, 2014 | May. 03, 2014 | Aug. 01, 2015 | Oct. 31, 2015 | Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | Feb. 02, 2013 | |
IT transformation costs expensed | $ 6,300 | |||||||||||||
IT transformation investments | $ 2,400 | $ 2,700 | $ 1,200 | |||||||||||
PROPERTY AND EQUIPMENT, net | 49,315 | 52,873 | 48,936 | 49,405 | $ 50,708 | $ 48,936 | $ 52,873 | $ 49,315 | $ 50,708 | |||||
TOTAL ASSETS | 633,833 | 653,924 | 632,134 | 654,062 | 645,722 | 632,134 | 653,924 | 633,833 | 645,722 | $ 847,185 | ||||
Other current liabilities | 66,466 | 59,859 | 75,755 | 72,769 | 61,085 | 75,755 | 59,859 | 66,466 | 61,085 | |||||
Total current liabilities | 228,654 | 234,239 | 207,096 | 228,750 | 221,162 | 207,096 | 234,239 | 228,654 | 221,162 | |||||
TOTAL LIABILITIES | 231,324 | 236,530 | 209,360 | 230,891 | 223,436 | 209,360 | 236,530 | 231,324 | 223,436 | |||||
TOTAL STOCKHOLDERS' EQUITY | 402,509 | 417,394 | 422,774 | 423,171 | 422,286 | 422,774 | 417,394 | 402,509 | 422,286 | 590,225 | $ 566,287 | |||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 633,833 | 653,924 | 632,134 | 654,062 | 645,722 | 632,134 | 653,924 | 633,833 | 645,722 | |||||
NET SALES | 538,266 | 547,143 | 619,610 | 582,769 | 562,339 | $ 565,147 | $ 638,693 | $ 589,854 | 2,287,788 | 2,356,033 | 2,421,562 | |||
COSTS AND EXPENSES | ||||||||||||||
Cost of sales and occupancy | 419,265 | 429,361 | 478,250 | 442,410 | 435,853 | 430,085 | 491,604 | 445,955 | 1,769,286 | 1,803,497 | 1,843,418 | |||
Selling and administrative | 146,089 | 125,409 | 138,920 | 135,710 | 132,365 | 139,766 | 139,226 | 135,279 | 546,128 | 546,636 | 506,630 | |||
Impairment of goodwill | 0 | 167,000 | 0 | 0 | 0 | 167,000 | 0 | |||||||
Depreciation | 8,250 | 2,271 | 2,164 | 1,861 | 3,782 | 2,035 | 2,067 | 2,288 | 2,164 | 6,296 | 14,546 | 10,172 | 12,006 | |
Gain on the sale of assets | 42 | (155) | 0 | 0 | 0 | (113) | (1,567) | |||||||
Total costs and expenses | 573,604 | 557,041 | 619,334 | 579,981 | 572,042 | 738,731 | 632,897 | 583,522 | 2,329,960 | 2,527,192 | 2,360,487 | |||
Operating income (loss) | (35,338) | (9,898) | 276 | 2,788 | (9,703) | (173,584) | 5,796 | 6,332 | (42,172) | (171,159) | 61,075 | |||
Interest income (expense) | (844) | (587) | (614) | (781) | (1,107) | (915) | (905) | (934) | ||||||
Other income | 622 | 721 | 560 | 682 | 783 | 888 | 798 | 680 | 2,585 | 3,149 | 1,854 | |||
Income (loss) before income taxes | (35,560) | (9,764) | 222 | 2,689 | (10,027) | (173,611) | 5,689 | 6,078 | (42,413) | (171,871) | 59,883 | |||
Income tax benefit (expense) | 12,955 | 4,221 | (627) | (1,397) | 5,393 | 2,401 | (2,329) | (2,399) | 15,152 | 3,066 | (24,333) | |||
NET INCOME (LOSS) | $ (22,605) | $ (5,543) | $ (405) | 1,292 | $ (4,634) | $ (171,210) | $ 3,360 | $ 3,679 | 887 | (4,656) | (27,261) | (168,805) | 35,550 | |
Other operating liabilities | 10,033 | 12,049 | 1,920 | 11,576 | 3,763 | (22,751) | ||||||||
Net cash provided by (used in) operating activities | 62,617 | 80,187 | 46,235 | 25,545 | 24,400 | (54,368) | ||||||||
Purchases of property and equipment | (870) | (2,543) | (7,142) | (11,430) | (12,849) | (10,704) | ||||||||
Net cash used in investing activities | $ (870) | (2,543) | (7,142) | $ (11,430) | $ (12,695) | $ (8,063) | ||||||||
Basic, (in usd per share) | $ (1) | $ (0.24) | $ (0.02) | $ 0.06 | $ (0.20) | $ (7.55) | $ 0.15 | $ 0.16 | ||||||
Diluted, (in usd per share) | $ (1) | $ (0.24) | $ (0.02) | $ 0.06 | $ (0.20) | $ (7.55) | $ 0.15 | $ 0.16 | ||||||
Basic weighted average common shares outstanding (in shares) | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,984 | |||
Diluted weighted average common shares outstanding (in shares) | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,989 | |||
Scenario, Previously Reported [Member] | ||||||||||||||
PROPERTY AND EQUIPMENT, net | $ 59,207 | $ 52,841 | $ 50,613 | 52,841 | 59,207 | |||||||||
TOTAL ASSETS | 660,258 | 636,039 | 655,270 | 636,039 | 660,258 | |||||||||
Other current liabilities | 61,695 | 76,887 | 73,119 | 76,887 | 61,695 | |||||||||
Total current liabilities | 236,075 | 208,228 | 229,100 | 208,228 | 236,075 | |||||||||
TOTAL LIABILITIES | 238,366 | 210,492 | 231,241 | 210,492 | 238,366 | |||||||||
TOTAL STOCKHOLDERS' EQUITY | 421,892 | 425,547 | 424,029 | 425,547 | 421,892 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 660,258 | 636,039 | 655,270 | 636,039 | 660,258 | |||||||||
NET SALES | 547,143 | 619,610 | 582,769 | |||||||||||
COSTS AND EXPENSES | ||||||||||||||
Cost of sales and occupancy | 429,361 | 478,250 | 442,410 | |||||||||||
Selling and administrative | 123,030 | 136,223 | 134,502 | |||||||||||
Depreciation | 2,221 | 2,164 | 1,861 | 2,164 | 6,246 | |||||||||
Total costs and expenses | 554,612 | 616,637 | 578,773 | |||||||||||
Operating income (loss) | (7,469) | 2,973 | 3,996 | |||||||||||
Interest income (expense) | (587) | (614) | (781) | |||||||||||
Other income | 721 | 560 | 682 | |||||||||||
Income (loss) before income taxes | (7,335) | 2,919 | 3,897 | |||||||||||
Income tax benefit (expense) | 3,517 | (1,409) | (1,747) | |||||||||||
NET INCOME (LOSS) | $ (3,818) | $ 1,510 | 2,150 | 3,660 | (158) | |||||||||
Other operating liabilities | 10,383 | 13,181 | 3,756 | |||||||||||
Net cash provided by (used in) operating activities | 63,825 | 84,092 | 52,519 | |||||||||||
Purchases of property and equipment | (2,078) | (6,448) | (13,426) | |||||||||||
Net cash used in investing activities | $ (2,078) | (6,448) | (13,426) | |||||||||||
Basic, (in usd per share) | $ (0.17) | $ 0.07 | $ 0.09 | |||||||||||
Diluted, (in usd per share) | $ (0.17) | $ 0.07 | $ 0.09 | |||||||||||
Basic weighted average common shares outstanding (in shares) | 22,666 | 22,666 | 22,666 | |||||||||||
Diluted weighted average common shares outstanding (in shares) | 22,666 | 22,666 | 22,666 | |||||||||||
Scenario, Adjustment [Member] | ||||||||||||||
PROPERTY AND EQUIPMENT, net | $ (6,334) | $ (3,905) | $ (1,208) | (3,905) | (6,334) | |||||||||
TOTAL ASSETS | (6,334) | (3,905) | (1,208) | (3,905) | (6,334) | |||||||||
Other current liabilities | (1,836) | (1,132) | (350) | (1,132) | (1,836) | |||||||||
Total current liabilities | (1,836) | (1,132) | (350) | (1,132) | (1,836) | |||||||||
TOTAL LIABILITIES | (1,836) | (1,132) | (350) | (1,132) | (1,836) | |||||||||
TOTAL STOCKHOLDERS' EQUITY | (4,498) | (2,773) | (858) | (2,773) | (4,498) | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | (6,334) | (3,905) | (1,208) | (3,905) | (6,334) | |||||||||
NET SALES | 0 | 0 | 0 | |||||||||||
COSTS AND EXPENSES | ||||||||||||||
Cost of sales and occupancy | 0 | 0 | 0 | |||||||||||
Selling and administrative | 2,379 | 2,697 | 1,208 | |||||||||||
Depreciation | 50 | 0 | 0 | 0 | 50 | |||||||||
Total costs and expenses | 2,429 | 2,697 | 1,208 | |||||||||||
Operating income (loss) | (2,429) | (2,697) | (1,208) | |||||||||||
Interest income (expense) | 0 | 0 | 0 | |||||||||||
Other income | 0 | 0 | 0 | |||||||||||
Income (loss) before income taxes | (2,429) | (2,697) | (1,208) | |||||||||||
Income tax benefit (expense) | 704 | 782 | 350 | |||||||||||
NET INCOME (LOSS) | $ (1,725) | $ (1,915) | (858) | (2,773) | (4,498) | |||||||||
Other operating liabilities | (350) | (1,132) | (1,836) | |||||||||||
Net cash provided by (used in) operating activities | (1,208) | (3,905) | (6,284) | |||||||||||
Purchases of property and equipment | 1,208 | 3,905 | 6,284 | |||||||||||
Net cash used in investing activities | $ 1,208 | $ 3,905 | $ 6,284 | |||||||||||
Basic, (in usd per share) | $ (0.07) | $ (0.09) | $ (0.03) | |||||||||||
Diluted, (in usd per share) | $ (0.07) | $ (0.09) | $ (0.03) | |||||||||||
Basic weighted average common shares outstanding (in shares) | 0 | 0 | 0 | |||||||||||
Diluted weighted average common shares outstanding (in shares) | 0 | 0 | 0 |
Income (loss) per Common Shar50
Income (loss) per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Jan. 30, 2016 | Oct. 31, 2015 | Aug. 01, 2015 | May. 02, 2015 | Jan. 31, 2015 | Nov. 01, 2014 | Aug. 02, 2014 | May. 03, 2014 | Aug. 01, 2015 | Oct. 31, 2015 | Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | |
Earnings Per Share [Abstract] | |||||||||||||
Basic weighted average shares | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,984 | ||
Dilutive effect of restricted stock | 0 | 0 | 5 | ||||||||||
Diluted weighted average shares | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,666 | 22,989 | ||
Net income (loss) | $ (22,605) | $ (5,543) | $ (405) | $ 1,292 | $ (4,634) | $ (171,210) | $ 3,360 | $ 3,679 | $ 887 | $ (4,656) | $ (27,261) | $ (168,805) | $ 35,550 |
Income (loss) per common share: | |||||||||||||
Basic (usd per share) | $ (1.20) | $ (7.45) | $ 1.55 | ||||||||||
Diluted (usd per share) | $ (1.20) | $ (7.45) | $ 1.55 |
Equity (Narrative) (Details)
Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 10, 2017 | May. 16, 2016 | Aug. 01, 2015 | May. 02, 2015 | Aug. 03, 2013 | Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | Jan. 30, 2016 | Aug. 28, 2013 |
Share Repurchase Program | ||||||||||
Authorized amount | $ 25,000 | |||||||||
Shares repurchased | 0 | 0 | 434,398 | |||||||
Share-based compensation | $ 12,523 | |||||||||
Share price | $ 28.83 | |||||||||
Remaining authorized repurchase amount | $ 12,500 | $ 12,500 | ||||||||
Restricted Stock [Member] | ||||||||||
Share Repurchase Program | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 0 | |||||||||
Amended and Restated 2012 Stock Plan (the 'Plan') [Member] | ||||||||||
Stock-based Compensation | ||||||||||
Shares reserved under plan | 4,000,000 | 4,000,000 | ||||||||
Amended and Restated 2012 Stock Plan (the 'Plan') [Member] | Restricted Stock [Member] | ||||||||||
Stock-based Compensation | ||||||||||
Stock granted | 14,000 | 89,221 | 103,221 | |||||||
Forfeited in period | 47,263 | |||||||||
Share-based compensation expense | $ (100) | |||||||||
Unrecognized compensation cost | $ 300 | $ 300 | ||||||||
Period for recognition | 2 years | |||||||||
Share Repurchase Program | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 55,958 | 55,958 | ||||||||
Amended and Restated 2012 Stock Plan (the 'Plan') [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||||
Stock-based Compensation | ||||||||||
Stock granted | 159,475 | 159,475 | ||||||||
Forfeited in period | 28,237 | |||||||||
Estimated amount due related to stock units | $ 300 | $ 300 | ||||||||
Share-based compensation expense | 300 | |||||||||
Unrecognized compensation cost | $ 700 | $ 700 | ||||||||
Period for recognition | 2 years | |||||||||
Share Repurchase Program | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 131,238 | 131,238 | ||||||||
Severance and Executive Transition Costs [Member] | Amended and Restated 2012 Stock Plan (the 'Plan') [Member] | Restricted Stock [Member] | ||||||||||
Stock-based Compensation | ||||||||||
Share-based compensation expense | $ (700) | |||||||||
Scenario, Forecast [Member] | ||||||||||
Share Repurchase Program | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 14,000 | 41,958 |
Equity (Restricted Stock Awards
Equity (Restricted Stock Awards) (Details) - Restricted Stock [Member] shares in Thousands | 12 Months Ended |
Jan. 30, 2016$ / sharesshares | |
Shares | |
Beginning of year balance | shares | 70 |
Granted | shares | 14 |
Vested | shares | 0 |
Forfeited | shares | (28) |
Balance at end of period | shares | 56 |
Weighted-Average Fair Value on Date of Grant | |
Beginning of year balance (in dollars per share) | $ / shares | $ 44.45 |
Granted (in dollars per share) | $ / shares | 9.38 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 44.45 |
Balance at end of period (in dollars per share) | $ / shares | $ 35.68 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |||
401(k) Savings Plan | $ 905 | $ 1,137 | $ 289 |