Sears Hometown & Outlet Stores (SHOS) 10-Q 3 Jun 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information Document - shares	3 Months Ended
	Apr. 30, 2016	Jun. 01, 2016
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Entity Registrant Name	Sears Hometown & Outlet Stores, Inc.
Entity Central Index Key	1,548,309
Current Fiscal Year End Date	--01-28
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		22,718,800

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 30, 2016	May. 02, 2015
Income Statement [Abstract]
NET SALES	$ 536,981	$ 582,769
COSTS AND EXPENSES
Cost of sales and occupancy	420,790	442,410
Selling and administrative	117,992	135,710
Depreciation and amortization	3,257	1,861
Total costs and expenses	542,039	579,981
Operating (loss) income	(5,058)	2,788
Interest expense	(766)	(781)
Other income	397	682
(Loss) income before income taxes	(5,427)	2,689
Income tax benefit (expense)	1,857	(1,397)
NET (LOSS) INCOME	$ (3,570)	$ 1,292
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS
Basic (in dollars per share)	$ (0.16)	$ 0.06
Diluted (in dollars per share)	$ (0.16)	$ 0.06
Basic weighted average common shares outstanding (in shares)	22,666	22,666
Diluted weighted average common shares outstanding (in shares)	22,666	22,666

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 30, 2016	May. 02, 2015
CURRENT ASSETS
Cash and cash equivalents	$ 22,703	$ 18,244	$ 27,393
Accounts and franchisee receivables, net	10,961	11,753	20,422
Merchandise inventories	430,416	434,846	438,895
Prepaid expenses and other current assets	23,119	22,176	19,220
Total current assets	487,199	487,019	505,930
PROPERTY AND EQUIPMENT, net	50,450	49,315	49,405
INTANGIBLE ASSETS, net	3,302	4,377	0
LONG-TERM DEFERRED TAXES	76,666	79,141	56,209
OTHER ASSETS, net	13,429	13,981	42,518
TOTAL ASSETS	631,046	633,833	654,062
CURRENT LIABILITIES
Short-term borrowings	32,000	68,300	30,000
Payable to Sears Holdings Corporation	103,150	54,126	101,156
Accounts payable	31,214	39,762	24,825
Other current liabilities	62,985	66,466	72,769
Total current liabilities	229,349	228,654	228,750
OTHER LONG-TERM LIABILITIES	2,708	2,670	2,141
TOTAL LIABILITIES	$ 232,057	$ 231,324	$ 230,891
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY
TOTAL STOCKHOLDERS' EQUITY	$ 398,989	$ 402,509	$ 423,171
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 631,046	$ 633,833	$ 654,062

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	May. 02, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$ (3,570)	$ 1,292
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	3,257	1,861
Share-based compensation	50	(407)
Deferred income taxes	2,475	55
(Recoveries) provision for losses on franchisee receivables	(232)	364
Change in operating assets and liabilities:
Accounts and franchisee receivables	1,437	(4,567)
Merchandise inventories	4,430	3,848
Payable to Sears Holdings Corporation	49,024	40,067
Accounts payable	(8,548)	9,937
Customer deposits	(169)	1,518
Other operating assets	(1,830)	(1,384)
Other operating liabilities	(3,359)	10,033
Net cash provided by operating activities	42,965	62,617
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(2,290)	(870)
Net cash used in investing activities	(2,290)	(870)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings from capital lease obligations	84	0
Net short-term payments	(36,300)	(54,100)
Net cash used in financing activities	(36,216)	(54,100)
NET CHANGE IN CASH AND CASH EQUIVALENTS	4,459	7,647
CASH AND CASH EQUIVALENTS—Beginning of period	18,244	19,746
CASH AND CASH EQUIVALENTS—End of period	22,703	27,393
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	782	834
Cash refunded for income taxes	$ (2,291)	$ (5,015)

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Capital in Excess of Par Value [Member]	Accumulated Deficit [Member]
Beginning balance at Jan. 31, 2015	$ 422,286	$ 227	$ 547,888	$ (125,829)
Beginning balance, Shares at Jan. 31, 2015		22,736
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	1,292			1,292
Share-based compensation	(407)	$ 0	(407)
Ending balance at May. 02, 2015	423,171	$ 227	547,481	(124,537)
Ending balance, Shares at May. 02, 2015		22,736
Beginning balance at Jan. 30, 2016	402,509	$ 227	555,372	(153,090)
Beginning balance, Shares at Jan. 30, 2016		22,722
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(3,570)			(3,570)
Share-based compensation	50		50
Share-based compensation, Shares		(3)
Ending balance at Apr. 30, 2016	$ 398,989	$ 227	$ 555,422	$ (156,660)
Ending balance, Shares at Apr. 30, 2016		22,719

Background and Basis of Present

Background and Basis of Presentation	3 Months Ended
	Apr. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BACKGROUND AND BASIS OF PRESENTATION	BACKGROUND AND BASIS OF PRESENTATION 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 April 30, 2016 the Company or its dealers and franchisees operated a total of 1,145 stores across all 50 states and in Puerto Rico and Bermuda. In these notes and elsewhere in this Quarterly Report on Form 10-Q the terms “we,” “us,” “our,” “SHO,” and the “Company” refer to Sears Hometown and Outlet Stores, Inc. and its subsidiaries. The Separation The Company separated from Sears Holdings Corporation (“Sears Holdings”) in October 2012 (the “Separation”). 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.” Basis of Presentation These unaudited condensed consolidated financial statements include the accounts of Sears Hometown and Outlet Stores, Inc. and its subsidiaries, all of which are wholly owned. These unaudited condensed consolidated financial statements do not include all of the information and footnotes required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, all adjustments (which include normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the first quarter ended April 30, 2016 are not necessarily indicative of the results that may be expected for the full fiscal year. These financial statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2016 (the "2015 10-K"). We operate through two segments--our Sears Hometown and Hardware segment ("Hometown") and our Sears Outlet segment ("Outlet"). Our first fiscal-quarter end is the Saturday closest to April 30 each year. Our fiscal-year end is the Saturday closest to January 31 each year. 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 ("VIE") as well as the methods permitted for determining the primary beneficiary of a variable interest entity. In addition, this guidance requires ongoing reassessments as to whether a reporting company is the primary beneficiary of a variable interest entity and disclosures regarding the reporting company’s involvement with a variable interest entity. On an ongoing basis the Company evaluates its business relationships, such as those with its independent dealers, independent franchisees, and suppliers, to identify potential variable interest entities. Generally, these businesses either 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. 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 under 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 risks, 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 Condensed 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 nonrecurring basis. The Company was not required to measure any other significant non-financial asset or liability at fair value as of April 30, 2016. Recent 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 to the audited consolidated financial statements in the Company’s 2015 Form 10-K, in the fourth quarter of 2015, the Company reevaluated its accounting for the previously announced IT transformation project that began in the first quarter of 2015, 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 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 expensed $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 items and determined that for each of the quarters in the year ended January 30, 2016 the items were immaterial. The unaudited quarterly condensed consolidated statements of operations and cash flows for the thirteen weeks ended May 2, 2015 and the condensed consolidated balance sheet as of May 2, 2015 reflect the changes as disclosed in Note 10 to the audited consolidated financial statements in the Company’s 2015 Form 10-K. 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 $1.0 million , $1.6 million and $1.1 million at April 30, 2016, May 2, 2015 and January 30, 2016, respectively, within other assets. Presentation of Financial Statements - Going Concern In August 2014, the FASB issued an accounting standards update which requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued. If substantial doubt exists, additional disclosures are required. This update will be effective for the Company in the fourth quarter of 2016. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. Revenue from Contracts with Customers In May 2014, the FASB issued an accounting standards update which replaces the current revenue recognition standards. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for the Company in the first quarter of 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	3 Months Ended
	Apr. 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 April 30, May 2, January 30, Short-term franchisee receivables $ 2,197 $ 10,378 $ 2,376 Miscellaneous receivables 9,985 13,200 10,754 Long-term franchisee receivables 21,302 48,266 23,068 Other assets 1,540 2,050 1,677 Allowance for losses on short-term franchisee receivables (1) (1,221 ) (3,156 ) (1,377 ) Allowance for losses on long-term franchisee receivables (1) (9,413 ) (7,798 ) (10,764 ) Total Accounts and franchisee receivables and other assets $ 24,390 $ 62,940 $ 25,734 (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 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.

Allowance for Losses on Franchi

Allowance for Losses on Franchisee Receivables	3 Months Ended
	Apr. 30, 2016
Receivables [Abstract]
Allowance for Losses on Franchisee Receivables	FOR LOSSES ON FRANCHISEE RECEIVABLES The allowance for losses on Franchisee Receivables consists of the following: 13 Weeks Ended 13 Weeks Ended 52 Weeks Ended Thousands April 30, 2016 May 2, 2015 January 30, 2016 Allowance for losses on franchisee receivables, beginning of period $ 12,141 $ 11,368 $ 11,368 Expense (recoveries) during the period (232 ) 364 25,426 Write off of franchisee receivables (1,275 ) (778 ) (24,653 ) Allowance for losses on franchisee receivables, end of period $ 10,634 $ 10,954 $ 12,141

Other Current and Long-Term Lia

Other Current and Long-Term Liabilities	3 Months Ended
	Apr. 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 April 30, 2016 May 2, 2015 January 30, 2016 Customer deposits $ 24,090 $ 31,758 $ 24,259 Sales and other taxes 13,254 15,855 12,880 Accrued expenses 22,114 20,574 23,865 Payroll and related items 5,079 4,685 6,563 Severance and executive transition costs 1,156 2,038 1,569 Total Other current and long-term liabilities $ 65,693 $ 74,910 $ 69,136

Intangible Assets

Intangible Assets	3 Months Ended
	Apr. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Intangible assets consist of the following: Thousands April 30, 2016 May 2, 2015 January 30, 2016 Reacquisition rights $ 6,100 $ — $ 6,100 Less: accumulated amortization expense (2,798 ) — (1,723 ) Total Intangible assets, net $ 3,302 $ — $ 4,377 In the fourth quarter of 2015 the Company repurchased a total of 58 franchised locations. In the first quarter of 2016 the Company repurchased 9 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 $1.1 million and $0 for the quarters ended April 30, 2016 and May 2, 2015, respectively. Amortization expense is estimated to be $1.6 million for the remainder of 2016, $1.3 million in 2017, $0.3 million in 2018, and $0.1 million in 2019.

Income Taxes

Income Taxes	3 Months Ended
	Apr. 30, 2016
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXES SHO and Sears Holdings have entered into a Tax Sharing Agreement 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 generally 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 generally 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 tax 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 our 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. For the 13 weeks ended April 30, 2016 and May 2, 2015, no unrecognized tax benefits have been identified and reflected in the financial statements. 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 condensed consolidated financial statements, no interest or penalties related to unrecognized tax benefits are reflected in the condensed consolidated balance sheets or statements of operations. As of April 30, 2016 the Company's net deferred tax asset balance was $76.7 million compared to $65.1 million as of May 2, 2015 and $79.1 million as of January 30, 2016. 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 . The valuation allowance to reduce this deferred tax asset since it does not meet the more-likely-than-not standard for realization as of April 30, 2016, May 2, 2015 and January 30, 2016 was $0.8 million , $0.1 million and $0.8 million , respectively. In the event that the Company does not achieve its forecasted results for the remainder of the fiscal year, additional valuation allowances may be required. We will continue to evaluate our valuation allowance during the remainder of the fiscal year for any change in circumstances that causes a change in judgment about the realization of the deferred tax asset.

Related Party Agreements and Tr

Related Party Agreements and Transactions	3 Months Ended
	Apr. 30, 2016
Related Party Transactions [Abstract]
RELATED-PARTY AGREEMENTS AND TRANSACTIONS	RELATED-PARTY AGREEMENTS AND TRANSACTIONS According to publicly available information ESL Investments, Inc. and investment affiliates (collectively, "ESL") beneficially own approximately 51% of our outstanding shares of common stock and approximately 50% of Sears Holdings' outstanding shares of common stock. SHO and Sears Holdings have entered into various agreements (the "SHO-Sears Holdings Agreements") that, among other things, (1) govern specified aspects of our relationship with Sears Holdings, (2) establish terms under which subsidiaries of Sears Holdings provide services to us, and (3) establish terms pursuant to which subsidiaries of Sears Holdings obtain merchandise inventories for us. The terms of the SHO-Sears Holdings Agreements were agreed to prior to the Separation (except for terms changes agreed to after the Separation that have been approved by the Audit Committee of SHO's Board of Directors) in the context of a parent-subsidiary relationship and in the overall context of the Separation. The costs and allocations charged to the Company by Sears Holdings do not necessarily reflect the costs of obtaining the services from unaffiliated third parties or of the Company itself providing the applicable services. The Company engages in frequent discussions, and seeks to resolve disputes, with Sears Holdings about the terms and conditions of the SHO-Sears Holdings Agreements, the business relationships that are reflected in the SHO-Sears Holdings Agreements, and the details of these business relationships, many of which details are not addressed by the terms and conditions of the SHO-Sears Holdings Agreements or, if addressed, in the past were, and in the future could be, in dispute as to their meaning or application in the context of the existing business relationships. Some of these discussions have resulted in adjustments to the relationships that the Company believes together are in Company's best interests. On May 11, 2016 SHO and Sears Holdings entered into amendments to most of the SHO-Sears Holdings Agreements. See Note 13. The following is a summary of the nature of the related-party transactions between SHO and Sears Holdings: • 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 contracts, delivery and handling services, and relating to the use in our stores of credit cards branded with the Sears name. For specified transactions SHO pays a commission to Sears Holdings. • We obtain a significant amount of our merchandise inventories from Sears Holdings. We have a retailer's customary rights to return to Sears Holdings merchandise that is defective (except with respect to agreed-upon amounts of defective apparel that we purchase and then liquidate) or otherwise does not meet contract requirements. In addition, we may determine that an item of Outlet merchandise (usually merchandise that is not new in-box) we have received from Sears Holdings cannot be refurbished or reconditioned or is otherwise not in a physical condition to offer for sale to our customers. We and Sears Holdings (and our Outlet vendors generally) refer to an item of merchandise in this condition as "not saleable" or "non-saleable," and in the normal course we can return the item to Sears Holdings. We generally have comparable return rights with our other Outlet vendors. • We pay royalties related to our sale of products branded with the KENMORE®, CRAFTSMAN®, and DIEHARD® marks (which marks are owned by subsidiaries of Sears Holdings, together the "KCD Marks"). • We pay fees for participation in Sears Holdings' SHOP YOUR WAY REWARDS® program. • We have also entered into agreements with Sears Holdings for logistics, handling, warehouse, and transportation services, the charges for which are based generally on merchandise inventory units. • Sears Holdings provides the Company with specified corporate services. These services include accounting and finance, human resources, and information technology, among other services. Sears Holdings charges the Company for these corporate services based on actual usage or pro rata charges based upon sales, head count, or other measurements. • Sears Holdings leases stores and distribution/repair facilities to the Company, for which the Company pays rent and related occupancy charges to Sears Holdings. The following table summarizes the results of the transactions with Sears Holdings reflected in the Company’s Condensed Consolidated Financial Statements: 13 Weeks Ended April 30, May 2, Thousands Net Commissions from Sears Holdings $ 21,574 $ 24,396 Purchases related to cost of sales and occupancy 313,534 359,354 Services included in selling and administrative 21,448 23,378 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 Holdings are non-interest bearing and, except as provided in the next sentence, are settled on a net basis and have payment terms of 10 days after the invoice date. Effective May 1, 2016 through July 31, 2016 an early-payment discount of 37 basis points will be applied to invoices if paid on 3-day terms, and after that period the early-payment terms will be applicable if both parties agree. We recorded occupancy payments of $0.2 million and $0 for the first quarters of 2016 and 2015, respectively to Seritage Growth Properties. Edward S. Lampert is the Chairman of the Board of Trustees of Seritage.

Financing Arrangement

Financing Arrangement	3 Months Ended
	Apr. 30, 2016
Debt Disclosure [Abstract]
Financing Arrangement	FINANCING ARRANGEMENT As of April 30, 2016 we had $32.0 million outstanding under our asset-based senior secured revolving credit facility with a group of financial institutions (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 April 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 April 30, 2016 was $212.3 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 our Merchandising Agreement with Sears Holdings (the "Merchandising Agreement"), our Services Agreement with Sears Holdings (the "Services 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 assets of the borrowers and guarantors consisting primarily of accounts and notes 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 2.44% at April 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 April 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 April 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 affirmative covenants, including financial and other reporting requirements. As of April 30, 2016, SHO was in compliance with all covenants under the Senior ABL Facility. Events of Default The Senior ABL Facility includes customary events of default including non-payment of principal, interest, or fees, violation of covenants, inaccuracy of representations or warranties, cross default to certain 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, the Services 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, and Sears Holdings' termination of the "Separation Agreements" (which include, among other SHO-Sears Holdings Agreements, the Merchandising Agreement and the Services Agreement).

Summary of Segment Data

Summary of Segment Data	3 Months Ended
	Apr. 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 Showrooms business formats described in “Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations-Executive Overview" of this Quarterly Report on Form 10-Q. 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 U.S. The net sales categories include appliances, lawn and garden, tools and paint, and other (which includes initial franchise revenue of $(0.2) million and $0.5 million for the 13 weeks ended April 30, 2016 and May 2, 2015, respectively). Initial franchise revenue consists of franchise fees paid with respect to new or existing Company-operated stores that we transfer to franchisees plus the net gain or loss on any related transfer of assets to the franchisees. 13 Weeks Ended April 30, 2016 Thousands Hometown Outlet Total Net sales Appliances $ 230,934 $ 142,048 $ 372,982 Lawn and garden 78,417 4,688 83,105 Tools and paint 36,117 4,614 40,731 Other 21,111 19,052 40,163 Total 366,579 170,402 536,981 Costs and expenses Cost of sales and occupancy 284,138 136,652 420,790 Selling and administrative 80,853 37,139 117,992 Depreciation and amortization 1,569 1,688 3,257 Total 366,560 175,479 542,039 Operating income (loss) $ 19 $ (5,077 ) $ (5,058 ) Total assets $ 421,801 $ 209,245 $ 631,046 Capital expenditures $ 1,306 $ 984 $ 2,290 13 Weeks Ended May 2, 2015 Thousands Hometown Outlet Total Net sales Appliances $ 254,912 $ 140,765 $ 395,677 Lawn and garden 89,976 4,431 94,407 Tools and paint 42,312 4,331 46,643 Other 23,460 22,582 46,042 Total 410,660 172,109 582,769 Costs and expenses Cost of sales and occupancy 311,087 131,323 442,410 Selling and administrative 94,622 41,088 135,710 Depreciation and amortization 653 1,208 1,861 Total 406,362 173,619 579,981 Operating income (loss) $ 4,298 $ (1,510 ) $ 2,788 Total assets $ 459,479 $ 194,583 $ 654,062 Capital expenditures $ 153 $ 717 $ 870

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Apr. 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 or in the aggregate, in the opinion of management would not have a material adverse effect on our business, financial position, results of operations, or cash flows.

Income (Loss) Per Common Share

Income (Loss) Per Common Share	3 Months Ended
	Apr. 30, 2016
Earnings Per Share [Abstract]
INCOME (LOSS) PER COMMON SHARE	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. There was no 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. 13 Weeks Ended 13 Weeks Ended April 30, 2016 May 2, 2015 Thousands except loss per common share Basic and diluted weighted average shares 22,666 22,666 Net (loss) income $ (3,570 ) $ 1,292 (Loss) income per common share: Basic and diluted $ (0.16 ) $ 0.06

Equity

Equity	3 Months Ended
	Apr. 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 April 30, 2016, 50,023 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 April 30, 2016, 28,237 stock units had been forfeited. 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 first quarter of 2016, we recorded $0.1 million in total compensation expense for the remaining 53,198 shares of restricted stock and 131,238 stock units (none of which had vested as of April 30, 2016). At April 30, 2016 we had $0.1 million in total unrecognized compensation cost related to the remaining non-vested restricted stock, which cost we expect to recognize over the next year . At April 30, 2016, we had $0.6 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 . On May 16, 2016 39,198 shares of restricted stock vested in accordance with the terms and conditions of restricted-stock agreements and the Plan. The remaining 14,000 shares of restricted stock 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: 13 Weeks Ended April 30, 2016 (Shares in Thousands) Shares Weighted-Average Fair Value on Date of Grant Beginning of year balance 56 $ 35.68 Granted — — Vested — — Forfeited (3 ) 44.45 Balance at 4/30/2016 53 $ 35.22 The remaining 131,238 stock units will vest, if at all, on April 13, 2018 in accordance with and subject to the terms and conditions of stock unit agreements, including forfeiture conditions, and the Plan. The fair value of these awards will vary based on changes in our stock price at each reporting period. 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. At April 30, 2016, the Senior ABL Facility prohibited cash dividends and the repurchase of our common stock. Shares that are repurchased by the Company pursuant to the repurchase program will be retired and resume the status of authorized and unissued shares of common stock. No shares were repurchased during the 13 weeks ended April 30, 2016. At April 30, 2016, we had approximately $12.5 million of remaining authorization under the repurchase program.

Subsequent Events

Subsequent Events	3 Months Ended
	Apr. 30, 2016
Subsequent Events [Abstract]
Subsequent Events	SUBSEQUENT EVENTS On May 11, 2016 the Company and Sears Holdings executed and delivered to each other amendments to the SHO-Sears Holdings Agreements including an amendment to the Merchandising Agreement (the "Merchandising Amendment"). The Merchandising Amendment provides that (a) SHO will pay Sears Holdings $0.6 million and SHO waives claims against Sears Holdings relating to product repair claims and (b) Sears Holdings waives claims against SHO relating to alleged KCD warranty fee underpayments and other IT and service-order transfer related claims. In accordance with the Merchandising Amendment, amounts previously recorded that related to the disputed matters were adjusted resulting in a $2.8 million reduction to cost of sales and occupancy expenses. On May 19, 2016 the Company entered into a definitive Purchase and Sale Agreement to sell a property held for sale and included in Property and Equipment, Net in the Condensed Consolidated Balance Sheet as of April 30, 2016 (as described in Note 1 to the 2015 10-K). The expected sales price of the property is $27.3 million and its carrying value was $1.1 million as of April 30, 2016. Accordingly, net of selling costs, the Company expects to record a gain on sale of approximately $25.7 million , which will be recorded in the second quarter of fiscal 2016 when the sale is completed in accordance with the terms and conditions of the Purchase and Sale Agreement.

Background and Basis of Prese19

Background and Basis of Presentation (Policies)	3 Months Ended
	Apr. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
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 ("VIE") as well as the methods permitted for determining the primary beneficiary of a variable interest entity. In addition, this guidance requires ongoing reassessments as to whether a reporting company is the primary beneficiary of a variable interest entity and disclosures regarding the reporting company’s involvement with a variable interest entity. On an ongoing basis the Company evaluates its business relationships, such as those with its independent dealers, independent franchisees, and suppliers, to identify potential variable interest entities. Generally, these businesses either 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.
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 under 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 risks, 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 Condensed 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 nonrecurring basis. The Company was not required to measure any other significant non-financial asset or liability at fair value as of April 30, 2016.
Recent Accounting Pronouncements	Recent 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 to the audited consolidated financial statements in the Company’s 2015 Form 10-K, in the fourth quarter of 2015, the Company reevaluated its accounting for the previously announced IT transformation project that began in the first quarter of 2015, 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 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 expensed $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 items and determined that for each of the quarters in the year ended January 30, 2016 the items were immaterial. The unaudited quarterly condensed consolidated statements of operations and cash flows for the thirteen weeks ended May 2, 2015 and the condensed consolidated balance sheet as of May 2, 2015 reflect the changes as disclosed in Note 10 to the audited consolidated financial statements in the Company’s 2015 Form 10-K. 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 $1.0 million , $1.6 million and $1.1 million at April 30, 2016, May 2, 2015 and January 30, 2016, respectively, within other assets. Presentation of Financial Statements - Going Concern In August 2014, the FASB issued an accounting standards update which requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued. If substantial doubt exists, additional disclosures are required. This update will be effective for the Company in the fourth quarter of 2016. The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. Revenue from Contracts with Customers In May 2014, the FASB issued an accounting standards update which replaces the current revenue recognition standards. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for the Company in the first quarter of 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 Recei20

Accounts and Franchisee Receivables and Other Assets (Tables)	3 Months Ended
	Apr. 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 April 30, May 2, January 30, Short-term franchisee receivables $ 2,197 $ 10,378 $ 2,376 Miscellaneous receivables 9,985 13,200 10,754 Long-term franchisee receivables 21,302 48,266 23,068 Other assets 1,540 2,050 1,677 Allowance for losses on short-term franchisee receivables (1) (1,221 ) (3,156 ) (1,377 ) Allowance for losses on long-term franchisee receivables (1) (9,413 ) (7,798 ) (10,764 ) Total Accounts and franchisee receivables and other assets $ 24,390 $ 62,940 $ 25,734 (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 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.

Allowance for Losses on Franc21

Allowance for Losses on Franchisee Receivables (Tables)	3 Months Ended
	Apr. 30, 2016
Receivables [Abstract]
Schedule of Provision for Losses on Franchisee Receivables	The allowance for losses on Franchisee Receivables consists of the following: 13 Weeks Ended 13 Weeks Ended 52 Weeks Ended Thousands April 30, 2016 May 2, 2015 January 30, 2016 Allowance for losses on franchisee receivables, beginning of period $ 12,141 $ 11,368 $ 11,368 Expense (recoveries) during the period (232 ) 364 25,426 Write off of franchisee receivables (1,275 ) (778 ) (24,653 ) Allowance for losses on franchisee receivables, end of period $ 10,634 $ 10,954 $ 12,141

Other Current and Long-Term L22

Other Current and Long-Term Liabilities (Tables)	3 Months Ended
	Apr. 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 April 30, 2016 May 2, 2015 January 30, 2016 Customer deposits $ 24,090 $ 31,758 $ 24,259 Sales and other taxes 13,254 15,855 12,880 Accrued expenses 22,114 20,574 23,865 Payroll and related items 5,079 4,685 6,563 Severance and executive transition costs 1,156 2,038 1,569 Total Other current and long-term liabilities $ 65,693 $ 74,910 $ 69,136

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Apr. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Finite-Lived Intangible Assets	Intangible assets consist of the following: Thousands April 30, 2016 May 2, 2015 January 30, 2016 Reacquisition rights $ 6,100 $ — $ 6,100 Less: accumulated amortization expense (2,798 ) — (1,723 ) Total Intangible assets, net $ 3,302 $ — $ 4,377

Related Party Agreements and 24

Related Party Agreements and Transactions (Tables)	3 Months Ended
	Apr. 30, 2016
Related Party Transactions [Abstract]
Schedule of Related Party Transactions	The following table summarizes the results of the transactions with Sears Holdings reflected in the Company’s Condensed Consolidated Financial Statements: 13 Weeks Ended April 30, May 2, Thousands Net Commissions from Sears Holdings $ 21,574 $ 24,396 Purchases related to cost of sales and occupancy 313,534 359,354 Services included in selling and administrative 21,448 23,378

Summary of Segment Data (Tables

Summary of Segment Data (Tables)	3 Months Ended
	Apr. 30, 2016
Segment Reporting [Abstract]
Schedule of Segment Data	13 Weeks Ended April 30, 2016 Thousands Hometown Outlet Total Net sales Appliances $ 230,934 $ 142,048 $ 372,982 Lawn and garden 78,417 4,688 83,105 Tools and paint 36,117 4,614 40,731 Other 21,111 19,052 40,163 Total 366,579 170,402 536,981 Costs and expenses Cost of sales and occupancy 284,138 136,652 420,790 Selling and administrative 80,853 37,139 117,992 Depreciation and amortization 1,569 1,688 3,257 Total 366,560 175,479 542,039 Operating income (loss) $ 19 $ (5,077 ) $ (5,058 ) Total assets $ 421,801 $ 209,245 $ 631,046 Capital expenditures $ 1,306 $ 984 $ 2,290 13 Weeks Ended May 2, 2015 Thousands Hometown Outlet Total Net sales Appliances $ 254,912 $ 140,765 $ 395,677 Lawn and garden 89,976 4,431 94,407 Tools and paint 42,312 4,331 46,643 Other 23,460 22,582 46,042 Total 410,660 172,109 582,769 Costs and expenses Cost of sales and occupancy 311,087 131,323 442,410 Selling and administrative 94,622 41,088 135,710 Depreciation and amortization 653 1,208 1,861 Total 406,362 173,619 579,981 Operating income (loss) $ 4,298 $ (1,510 ) $ 2,788 Total assets $ 459,479 $ 194,583 $ 654,062 Capital expenditures $ 153 $ 717 $ 870

Income (Loss) Per Common Share

Income (Loss) Per Common Share (Tables)	3 Months Ended
	Apr. 30, 2016
Earnings Per Share [Abstract]
Schedule of Income (Loss) 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. 13 Weeks Ended 13 Weeks Ended April 30, 2016 May 2, 2015 Thousands except loss per common share Basic and diluted weighted average shares 22,666 22,666 Net (loss) income $ (3,570 ) $ 1,292 (Loss) income per common share: Basic and diluted $ (0.16 ) $ 0.06

Equity (Tables)

Equity (Tables)	3 Months Ended
	Apr. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Restricted Stock Award Activity	Changes in restricted-stock awards for 2015 were as follows: 13 Weeks Ended April 30, 2016 (Shares in Thousands) Shares Weighted-Average Fair Value on Date of Grant Beginning of year balance 56 $ 35.68 Granted — — Vested — — Forfeited (3 ) 44.45 Balance at 4/30/2016 53 $ 35.22

Background and Basis of Prese28

Background and Basis of Presentation (Details) $ in Millions	3 Months Ended
	Apr. 30, 2016USD ($)storesegmentstate	Jan. 30, 2016USD ($)	Oct. 31, 2015USD ($)	Aug. 01, 2015USD ($)	May. 02, 2015USD ($)
Line of Credit Facility [Line Items]
Number of stores | store	1,145
Number of states in which the Company operates | state	50
Number of operating segments | segment	2
IT transformation costs expensed		$ 6.3
IT transformation costs capitalized			$ 2.4	$ 2.7	$ 1.2
Letter of Credit [Member] | Senior ABL Facility [Member]
Line of Credit Facility [Line Items]
Unamortized debt issuance cost	$ 1	$ 1.1			$ 1.6

Accounts and Franchisee Recei29

Accounts and Franchisee Receivables and Other Assets (Details) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 30, 2016	May. 02, 2015
Receivables [Abstract]
Short-term franchisee receivables	$ 2,197	$ 2,376	$ 10,378
Miscellaneous receivables	9,985	10,754	13,200
Long-term franchisee receivables	21,302	23,068	48,266
Other assets	1,540	1,677	2,050
Provision for losses on short-term franchisee receivables	(1,221)	(1,377)	(3,156)
Provision for losses on long-term franchisee receivables	(9,413)	(10,764)	(7,798)
Total Accounts and franchisee receivables and other assets	$ 24,390	$ 25,734	$ 62,940

Allowance for Losses on Franc30

Allowance for Losses on Franchisee Receivables (Details) - Franchise Receivable [Member] - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Apr. 30, 2016	May. 02, 2015	Jan. 30, 2016
Provision for Losses on Franchisee Receivables [Roll Forward]
Allowance for losses on franchisee receivables, beginning of period	$ 12,141	$ 11,368	$ 11,368
Expense (recoveries) during the period	(232)	364	25,426
Write off of franchisee receivables	(1,275)	(778)	(24,653)
Allowance for losses on franchisee receivables, end of period	$ 10,634	$ 10,954	$ 12,141

Other Current and Long-Term L31

Other Current and Long-Term Liabilities (Details) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 30, 2016	May. 02, 2015
Payables and Accruals [Abstract]
Customer deposits	$ 24,090	$ 24,259	$ 31,758
Sales and other taxes	13,254	12,880	15,855
Accrued expenses	22,114	23,865	20,574
Payroll and related items	5,079	6,563	4,685
Severance and executive transition costs	1,156	1,569	2,038
Total Other current and long-term liabilities	$ 65,693	$ 69,136	$ 74,910

Intangible Assets (Details)

Intangible Assets (Details)	3 Months Ended		12 Months Ended
	Apr. 30, 2016USD ($)location	Jan. 30, 2016USD ($)location	Jan. 30, 2016USD ($)	Jan. 31, 2015USD ($)	May. 02, 2015USD ($)
Goodwill [Line Items]
Finite-Lived Intangible Assets, Amortization Expense, 2019		$ 100,000	$ 100,000
Franchise Rights [Member]
Goodwill [Line Items]
Reacquisition rights	$ 6,100,000	6,100,000	6,100,000		$ 0
Less: accumulated amortization expense	(2,798,000)	(1,723,000)	(1,723,000)		0
Total Intangible assets, net	$ 3,302,000	$ 4,377,000	$ 4,377,000		$ 0
Significant Changes, Franchises Purchased During Period | location	9	58
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			2 years 3 months 18 days
Amortization of Intangible Assets	$ 1,100,000			$ 0
Finite-Lived Intangible Assets, Amortization Expense, Remainder of 2016		$ 1,600,000	$ 1,600,000
Finite-Lived Intangible Assets, Amortization Expense, 2017		1,300,000	1,300,000
Finite-Lived Intangible Assets, Amortization Expense, 2018		$ 300,000	$ 300,000

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 30, 2016	May. 02, 2015
Tax Credit Carryforward [Line Items]
Deferred tax assets	$ 76.7	$ 79.1	$ 65.1
Foreign Tax Authority [Member]
Tax Credit Carryforward [Line Items]
Puerto rico AMT credit carryforward deferred tax asset	1.4
Deferred tax asset valuation allowance	$ 0.8	$ 0.8	$ 0.1

Related Party Agreements and 34

Related Party Agreements and Transactions (Details) - USD ($)	3 Months Ended
	Apr. 30, 2016	May. 02, 2015
ESL [Member]
Related Party Transaction [Line Items]
Beneficial interest acquired by related party, percentage	51.00%
Sears Holdings Corporation [Member]
Related Party Transaction [Line Items]
Net Commissions from Sears Holdings	$ 21,574,000	$ 24,396,000
Purchases related to cost of sales and occupancy	313,534,000	359,354,000
Services included in selling and administrative	$ 21,448,000	23,378,000
Invoice payment term	10 days
Seritage Growth Properties [Member]
Related Party Transaction [Line Items]
Occupancy payments	$ 200,000	$ 0
Sears Holdings [Member] | ESL [Member]
Related Party Transaction [Line Items]
Beneficial interest acquired by related party, percentage	50.00%

Financing Arrangement (Details)

Financing Arrangement (Details) - Senior ABL Facility [Member]	3 Months Ended
	Apr. 30, 2016USD ($)
Debt Instrument [Line Items]
Remaining borrowing capacity	$ 32,000,000
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
LIBOR [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	2.44%
Base Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	4.50%
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]
Remaining borrowing capacity	212,300,000
Aggregate maximum borrowings	75,000,000
Amount outstanding	5,700,000
Swingline Loans [Member]
Debt Instrument [Line Items]
Aggregate maximum borrowings	$ 25,000,000

Summary of Segment Data (Detail

Summary of Segment Data (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	May. 02, 2015	Jan. 30, 2016
Segment Reporting Information [Line Items]
Initial franchise revenue	$ (200)	$ 500
Net sales	536,981	582,769
Cost of sales and occupancy	420,790	442,410
Selling and administrative	117,992	135,710
Depreciation and amortization	3,257	1,861
Total costs and expenses	542,039	579,981
Operating (loss) income	(5,058)	2,788
Total assets	631,046	654,062	$ 633,833
Capital expenditures	2,290	870
Appliances [Member]
Segment Reporting Information [Line Items]
Net sales	372,982	395,677
Lawn and Garden [Member]
Segment Reporting Information [Line Items]
Net sales	83,105	94,407
Tools and Paint [Member]
Segment Reporting Information [Line Items]
Net sales	40,731	46,643
Other [Member]
Segment Reporting Information [Line Items]
Net sales	40,163	46,042
Sears Hometown and Hardware [Member]
Segment Reporting Information [Line Items]
Net sales	366,579	410,660
Cost of sales and occupancy	284,138	311,087
Selling and administrative	80,853	94,622
Depreciation and amortization	1,569	653
Total costs and expenses	366,560	406,362
Operating (loss) income	19	4,298
Total assets	421,801	459,479
Capital expenditures	1,306	153
Sears Hometown and Hardware [Member] | Appliances [Member]
Segment Reporting Information [Line Items]
Net sales	230,934	254,912
Sears Hometown and Hardware [Member] | Lawn and Garden [Member]
Segment Reporting Information [Line Items]
Net sales	78,417	89,976
Sears Hometown and Hardware [Member] | Tools and Paint [Member]
Segment Reporting Information [Line Items]
Net sales	36,117	42,312
Sears Hometown and Hardware [Member] | Other [Member]
Segment Reporting Information [Line Items]
Net sales	21,111	23,460
Sears Outlet [Member]
Segment Reporting Information [Line Items]
Net sales	170,402	172,109
Cost of sales and occupancy	136,652	131,323
Selling and administrative	37,139	41,088
Depreciation and amortization	1,688	1,208
Total costs and expenses	175,479	173,619
Operating (loss) income	(5,077)	(1,510)
Total assets	209,245	194,583
Capital expenditures	984	717
Sears Outlet [Member] | Appliances [Member]
Segment Reporting Information [Line Items]
Net sales	142,048	140,765
Sears Outlet [Member] | Lawn and Garden [Member]
Segment Reporting Information [Line Items]
Net sales	4,688	4,431
Sears Outlet [Member] | Tools and Paint [Member]
Segment Reporting Information [Line Items]
Net sales	4,614	4,331
Sears Outlet [Member] | Other [Member]
Segment Reporting Information [Line Items]
Net sales	$ 19,052	$ 22,582

Income (Loss) Per Common Shar37

Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 30, 2016	May. 02, 2015
Earnings Per Share [Abstract]
Basic and diluted weighted average shares	22,666	22,666
Net (loss) income	$ (3,570)	$ 1,292
(Loss) income per common share:
Basic and diluted (in dollars per share)	$ (0.16)	$ 0.06

Equity (Narrative) (Details)

Equity (Narrative) (Details) - USD ($)	3 Months Ended
	Apr. 30, 2016	Aug. 01, 2015	May. 02, 2015	Aug. 03, 2013	Aug. 28, 2013
Stock-based Compensation
Shares reserved under plan	4,000,000
Share Repurchase Program
Authorized amount					$ 25,000,000
Remaining authorized repurchase amount	$ 12,500,000
Restricted Stock [Member]
Stock-based Compensation
Stock granted	103,221	14,000		89,221
Forfeited in period	50,023
Share-based compensation expense	$ 100,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	53,198
Total unrecognized compensation	$ 100,000
Restricted Stock [Member] | May 16, 2016 [Member]
Stock-based Compensation
Stock granted	39,198
Restricted Stock [Member] | July 10, 2017 [Member]
Stock-based Compensation
Stock granted	14,000
Restricted Stock Units (RSUs) [Member]
Stock-based Compensation
Stock granted			159,475
Forfeited in period	28,237
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	131,238
Total unrecognized compensation	$ 600,000
Period for recognition	2 years
Restricted Stock Units (RSUs) [Member] | April 13, 2018 [Member]
Stock-based Compensation
Stock granted	131,238

Equity (Restricted Stock Awards

Equity (Restricted Stock Awards) (Details) - Restricted Stock [Member] shares in Thousands	3 Months Ended
	Apr. 30, 2016$ / sharesshares
Shares
Beginning of year balance | shares	56
Granted | shares	0
Vested | shares	0
Forfeited | shares	(3)
Balance at end of period | shares	53
Weighted-Average Fair Value on Date of Grant
Beginning of year balance (in dollars per share) | $ / shares	$ 35.68
Granted (in dollars per share) | $ / shares	0
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	$ 35.22

Subsequent Events (Details)

Subsequent Events (Details) - USD ($)	May. 11, 2016	Aug. 04, 2016	May. 19, 2016	Apr. 30, 2016
SHO-Sears Holdings Merchandising Amendment [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Amount SHO will pay Sears Holding per the Amended Merchandising Agreement	$ 600,000
reduction in cost of sales and occupancy expenses	$ 2,800,000
Purchase and Sale Agreement [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Expected sales price of property to be sold			$ 27,300,000
Expected gain on sale of property		$ 25,700,000
Purchase and Sale Agreement [Member] | Property, Plant and Equipment [Member]
Subsequent Event [Line Items]
Carrying value of property held for sale				$ 1,100,000