Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 03, 2018 | Apr. 16, 2018 | Jul. 29, 2017 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Feb. 3, 2018 | ||
Document Fiscal Year Focus | 2,017 | ||
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 | --02-03 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 22,702,132 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 32,257,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Income Statement [Abstract] | |||
NET SALES | $ 1,719,951 | $ 2,070,056 | $ 2,287,788 |
COSTS AND EXPENSES | |||
Cost of sales and occupancy | 1,371,408 | 1,661,314 | 1,769,286 |
Selling and administrative | 419,567 | 458,786 | 546,128 |
Impairment of property and equipment | 3,357 | 9,356 | 3,984 |
Depreciation and amortization | 13,039 | 13,458 | 10,562 |
Gain on the sale of assets | 0 | (25,203) | 0 |
Total costs and expenses | 1,807,371 | 2,117,711 | 2,329,960 |
Operating loss | (87,420) | (47,655) | (42,172) |
Interest expense | (8,058) | (4,263) | (2,826) |
Other income | 925 | 1,490 | 2,585 |
Loss before income taxes | (94,553) | (50,428) | (42,413) |
Income tax (expense) benefit | (504) | (81,491) | 15,152 |
NET LOSS | $ (95,057) | $ (131,919) | $ (27,261) |
NET LOSS PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS | |||
Basic (usd per share) | $ (4.19) | $ (5.81) | $ (1.20) |
Diluted (usd per share) | $ (4.19) | $ (5.81) | $ (1.20) |
Basic weighted average common shares outstanding | 22,702 | 22,691 | 22,666 |
Diluted weighted average common shares outstanding | 22,702 | 22,691 | 22,666 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Feb. 03, 2018 | Jan. 28, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 10,402 | $ 14,104 |
Accounts and franchisee receivables, net | 14,672 | 11,448 |
Merchandise inventories | 336,294 | 373,815 |
Prepaid expenses and other current assets | 7,131 | 9,370 |
Total current assets | 368,499 | 408,737 |
PROPERTY AND EQUIPMENT, net | 36,049 | 40,935 |
OTHER ASSETS, net | 8,140 | 18,754 |
TOTAL ASSETS | 412,688 | 468,426 |
CURRENT LIABILITIES | ||
Short-term borrowings | 137,900 | 26,800 |
Payable to Sears Holdings Corporation | 28,082 | 80,724 |
Accounts payable | 15,741 | 17,853 |
Other current liabilities | 53,142 | 70,377 |
Total current liabilities | 234,865 | 195,754 |
OTHER LONG-TERM LIABILITIES | 2,284 | 1,973 |
TOTAL LIABILITIES | 237,149 | 197,727 |
COMMITMENTS AND CONTINGENCIES (Note 10) | ||
STOCKHOLDERS' EQUITY | ||
Common stock | 227 | 227 |
Capital in excess of par value | 555,378 | 555,481 |
Accumulated deficit | (380,066) | (285,009) |
TOTAL STOCKHOLDERS' EQUITY | 175,539 | 270,699 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 412,688 | $ 468,426 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 03, 2018 | Jan. 28, 2017 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par Value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 400,000 | 400,000 |
Common Stock, Shares Issued | 22,702 | 22,716 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net loss | $ (95,057) | $ (131,919) | $ (27,261) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities | |||
Depreciation and amortization | 13,039 | 13,458 | 10,562 |
Share-based compensation | (103) | 109 | (70) |
Gain on the sale of assets | 0 | (25,203) | 0 |
Impairment of property and equipment | 3,357 | 9,356 | 3,984 |
Provision (recoveries) for losses on franchisee receivables | 7,361 | (791) | 25,426 |
Change in operating assets and liabilities: | |||
Accounts and franchisee receivables | (2,508) | 2,255 | 1,056 |
Merchandise inventories | 37,521 | 61,031 | 7,897 |
Payable to Sears Holdings Corporation | (52,642) | 26,598 | (6,963) |
Accounts payable | (2,112) | (21,909) | 24,874 |
Store closing accrual | (3,004) | 7,659 | 0 |
Customer deposits | (3,287) | (4,316) | (5,982) |
Deferred income taxes | 0 | 79,141 | (6,431) |
Other operating assets and liabilities, net | (8,211) | 13,413 | (1,547) |
Net cash (used in) provided by operating activities | (105,646) | 28,882 | 25,545 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Proceeds from sale of property | 0 | 26,073 | 0 |
Purchases of property and equipment | (9,228) | (12,198) | (11,430) |
Net cash (used in) provided by investing activities | (9,228) | 13,875 | (11,430) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Net borrowings of capital lease obligations | 72 | 37 | 183 |
Net borrowings (payments) on short-term borrowings | 111,100 | (41,500) | (15,800) |
Payments for refinancing fees | 0 | (5,434) | 0 |
Net cash provided by (used in) financing activities | 111,172 | (46,897) | (15,617) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (3,702) | (4,140) | (1,502) |
CASH AND CASH EQUIVALENTS—Beginning of period | 14,104 | 18,244 | 19,746 |
CASH AND CASH EQUIVALENTS—End of period | 10,402 | 14,104 | 18,244 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||
Cash paid for interest | 7,848 | 4,168 | 2,945 |
Cash paid (refunded) for income taxes | 808 | (9,788) | (5,764) |
Tax adjustment related to separation | 0 | 0 | 7,554 |
Reacquisition rights in exchange for notes receivable | $ 0 | $ 0 | $ 6,100 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Capital in Excess of Par Value [Member] | Retained Earnings [Member] |
Beginning balance at Jan. 31, 2015 | $ 422,286 | $ 227 | $ 547,888 | $ (125,829) |
Beginning balance (in shares) at Jan. 31, 2015 | 22,736 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (27,261) | (27,261) | ||
Share-based compensation | (70) | (70) | ||
Share-based compensation (in shares) | (14) | |||
Tax adjustment related to the separation | 7,554 | 7,554 | ||
Ending balance at Jan. 30, 2016 | 402,509 | $ 227 | 555,372 | (153,090) |
Ending balance (in shares) at Jan. 30, 2016 | 22,722 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (131,919) | (131,919) | ||
Share-based compensation | 109 | 109 | ||
Share-based compensation (in shares) | (6) | |||
Tax adjustment related to the separation | 0 | |||
Ending balance at Jan. 28, 2017 | 270,699 | $ 227 | 555,481 | (285,009) |
Ending balance (in shares) at Jan. 28, 2017 | 22,716 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (95,057) | (95,057) | ||
Share-based compensation | (103) | (103) | ||
Share-based compensation (in shares) | (14) | |||
Tax adjustment related to the separation | 0 | |||
Ending balance at Feb. 03, 2018 | $ 175,539 | $ 227 | $ 555,378 | $ (380,066) |
Ending balance (in shares) at Feb. 03, 2018 | 22,702 |
Background, and Basis of Presen
Background, and Basis of Presentation and Significant Accounting Policies | 12 Months Ended |
Feb. 03, 2018 | |
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 February 3, 2018 , the Company and our independent dealers and franchisees operated a total of 900 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. The Company separated from Sears Holdings Corporation (“Sears Holdings”) in October 2012 (the “Separation”). To our knowledge Sears Holdings does not own any shares of our common stock. The Company has specified rights to use the "Sears" name under a license agreement from Sears Holdings. 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"). Reclassifications - Certain prior period reclassifications were made to conform with the current period presentation. These reclassifications had no effect on reported operations, cash flows, total assets, or stockholders' equity as previously reported. 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 2017 February 3, 2018 53 2016 January 28, 2017 52 2015 January 30, 2016 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 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 $5.8 million at February 3, 2018 and $8.2 million at January 28, 2017 . 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 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. 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 insignificantly higher at February 3, 2018 and January 28, 2017 . Vendor Rebates and Allowances We receive rebates and allowances from vendors through a variety of programs and arrangements intended to offset the costs of promoting and selling the vendors' products. In addition, Sears Holdings allocates a portion of the rebates and allowances it receives from vendors based on shipments to or sales of the related products to the Company. 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 February 3, 2018 January 28, 2017 Land $ 1,741 $ 1,741 Buildings and improvements 35,065 41,071 Furniture, fixtures and equipment 37,303 37,174 Capitalized leases 1,276 1,175 Total property and equipment 75,385 81,161 Less: accumulated depreciation (39,336 ) (40,226 ) Total property and equipment, net $ 36,049 $ 40,935 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. Total depreciation expense was $11.8 million , $10.6 million , and $8.8 million for fiscal years 2017 , 2016 and 2015 , respectively. As of February 3, 2018 , management has identified one property that is deemed held for sale based on criteria in Accounting Standards Codification ("ASC") 360-10-45-9. This property is reflected in each category of Property and Equipment with the exception of capitalized leases in the table above and had a carrying value of $1.5 million as of February 3, 2018 . As of February 3, 2018 , the expected fair value less the cost of sale exceeded the carrying value of the Property and Equipment. Intangible Assets Intangible assets, included in other assets on the Consolidated Balance Sheets, consist of the following: thousands February 3, 2018 January 28, 2017 Reacquisition rights $ 6,100 $ 6,100 Less: accumulated amortization (5,845 ) (4,573 ) Total intangible assets, net $ 255 $ 1,527 In 2015, the Company repurchased franchised locations and 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. In fiscal 2016 and 2017, the Company repurchased a total of 24 and 32 franchised locations, respectively. There was no reacquisition rights value associated with the transactions in fiscal 2017 and 2016, as several of the reacquired stores were closed and the remaining had negative cash flows and minimal time remaining on the lease. 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 remaining weighted-average amortization period of 0.3 years. Amortization expense for reacquisition rights was $1.3 million , $2.8 million , and $1.7 million for 2017, 2016, and 2015, respectively. Amortization expense is estimated to be $0.3 million in fiscal 2018, at which point the reacquisition rights will be fully amortized. 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 recorded impairment charges with respect to long-lived assets of $3.4 million , $9.4 million and $4.0 million in fiscal years 2017 , 2016 and 2015 , respectively, included in Impairment of property and equipment in the accompanying Consolidated Statements of Operations. 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 reserve 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. As of February 3, 2018, this liability was approximately $4.7 million . See Note 15. 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 26 locations. We had rent expense paid to Sears Holdings of $10.8 million , $17.0 million and $19.3 million in 2017 , 2016 and 2015 , respectively. We also had rent expense paid to Seritage Growth Properties of $1.1 million , $1.0 million and $0.5 million in 2017, 2016 and 2015, respectively, for occupancy charges for three properties we lease from Seritage. Rental expense for operating leases was as follows: Fiscal Year thousands 2017 2016 2015 Minimum rentals 59,533 69,111 63,336 Less-Sublease rentals (7,399 ) (13,181 ) (25,505 ) Total 52,134 55,930 37,831 Minimum lease obligations excluding taxes, insurance and other expenses are as follows: Fiscal Year (thousands) Capital Leases Operating Leases 2018 $ 267 $ 44,076 2019 308 32,697 2020 17 27,422 2021 11 20,917 2022 10 14,264 Thereafter — 8,821 Total Minimum Lease Payments 613 148,197 Less - Sublease Income on Leased Properties — (7,308 ) Net Minimum Lease Payments $ 613 $ 140,889 Capital lease obligations 613 Less Current Portion of Capital Lease Obligations (267 ) Long-term Capital Lease Obligations $ 346 Insurance Programs We maintain our own insurance arrangements with third-party insurance companies for exposures incurred for a number of risks including worker’s compensation and general liability claims. Insurance expense of $5.3 million , $5.4 million and $4.1 million was recorded during 2017 , 2016 and 2015 , 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, Company websites, services and extended-service plans, financing programs, 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 $1.1 million at February 3, 2018 and January 28, 2017 , respectively. 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 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. 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. 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 $171.7 million , $209.5 million , and $278.1 million in 2017 , 2016 and 2015 , respectively. Commission costs vary based on factors including store count, number of dealer and franchise locations, sales mix, sales volume, and commission rates. 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 $48.2 million , $65.2 million and $70.5 million for 2017 , 2016 and 2015 , 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. For the year-ended February 3, 2018 , a valuation allowance of $92.4 million has been recorded for the full amount of the net deferred tax assets. In the future, we may record additional net deferred tax assets and if future utilization of deferred tax assets is uncertain, we may record additional valuation allowance against such deferred tax assets. 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 to Sears Holdings, 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 1, the Company recorded impairment charges of $3.4 million , $9.4 million and $4.0 million on its property and equipment in 2017 , 2016 , and 2015 , respectively. The Company utilized Level 3 inputs to measure the fair value of property and equipment, and intangible assets. New Accounting Pronouncements ASU 2016-17 "Consolidation (Topic 810) Interests Held through Related Parties That Are under Common Control" In October 2016, the FASB issued an accounting standards update to amend the accounting standards on how a reporting entity that is the single decision maker of a variable interest entity ("VIE") should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The primary beneficiary of a VIE is the reporting entity that has a controlling financial interest in a VIE and, therefore, consolidates the VIE. A reporting entity has an indirect interest in a VIE if it has a direct interest in a related party that, in turn, has a direct interest in the VIE. Under the amendments, a single decision maker is not required to consider indirect interests held through related parties that are under common control with the single decision maker to be the equivalent of direct interests in their entirety. Instead, a single decision maker is required to include those interests on a proportionate basis consistent with indirect interests held through other related parties. The Company adopted the update in the first quarter of 2017. The adoption of the new standard did not have an impact on the Company's consolidated financial position, results of operations or cash flows. ASU 2016-16 "Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory" In October 2016, the FASB issued an accounting standards update to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Current accounting standards prohibit the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. In addition, interpretations of this guidance have developed in practice for transfers of certain intangible and tangible assets. This prohibition on recognition is an exception to the principle of comprehensive recognition of current and deferred income taxes in accounting standards. To more faithfully represent the economics of intra-entity asset transfers, the amendments in this update require that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this update do not change accounting standards for the pre-tax effects of an intra-entity asset transfer under accounting standards applicable to consolidation, or for an intra-entity transfer of inventory. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted as of the beginning of an annual reporting period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. This guidance is not expected to have a material impact on our consolidated financial statements. ASU 2016-02 "Leases (Topic 842)" 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, and expect the update will have a material impact on our consolidated financial statements. ASU 2014-09 , "Revenue from Contracts with Customers (Topic 606)" In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)", which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) 605, Revenue Recognition effective January 1, 2018. Several additional ASUs have subsequently been issued amending and clarifying the standard. The core principle of ASU 2014-09 is that an entity 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. The guidance provides a five-step process to achieve that core principle. We adopted this standard on February 4, 2018, using the modified retrospective approach, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption. We have completed our review of the standard and determined the adoption will impact our balance sheet presentation related to merchandise returns. We currently present our returns reserve net of anticipated resaleable merchandise returns. The new guidance requires that we present a right of return asset separately from the liability for anticipated customer returns. Upon adoption of the standard, the Company will reclassify/record a right of return asset of approximately $1.0 million and $1.5 million . The adoption of this standard did not result in a material cumulative effect adjustment as of February 4, 2018, and with the exception of merchandise returns, the guidance is not expected to have a material impact on our consolidated financial statements. We will include the additional required disclosures beginning with our Form 10-Q for the first quarter of 2018. |
Accounts and Franchisee Receiva
Accounts and Franchisee Receivables and Other Assets | 12 Months Ended |
Feb. 03, 2018 | |
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 February 3, 2018 January 28, 2017 Short-term franchisee receivables $ 1,205 $ 1,920 Miscellaneous receivables 14,314 10,475 Long-term franchisee receivables 7,962 18,406 Other assets 5,106 7,643 Allowance for losses on short-term franchisee receivables (1) (847 ) (947 ) Allowance for losses on long-term franchisee receivables (1) (4,928 ) (7,295 ) Total Accounts and franchisee receivables and other assets $ 22,812 $ 30,202 (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. We establish allowances for losses on franchisee receivables based on our receivable-by-receivable assessment during the year and determine that some of the franchisee receivables are potentially uncollectible in future periods due to declining results of operations of, or other adverse financial events with respect to, franchise stores that indicate 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 |
Feb. 03, 2018 | |
Receivables [Abstract] | |
ALLOWANCE FOR LOSSES ON FRANCHISEE RECEIVABLES | ALLOWANCE FOR LOSSES ON FRANCHISEE RECEIVABLES The allowance for losses on Franchisee Receivables consists of the following: thousands February 3, 2018 January 28, 2017 Allowance for losses on franchisee receivables, beginning of period $ 8,242 $ 12,141 Expense (benefit) during the period 7,361 (791 ) Write off of franchisee receivables (9,828 ) (3,383 ) Other — 275 Allowance for losses on franchisee receivables, end of period $ 5,775 $ 8,242 |
Other Current and Long-Term Lia
Other Current and Long-Term Liabilities | 12 Months Ended |
Feb. 03, 2018 | |
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 February 3, 2018 January 28, 2017 Customer deposits $ 16,655 $ 19,943 Sales and other taxes 9,221 11,380 Accrued expenses 17,755 27,602 Payroll and related items 7,140 5,766 Store closing and severance costs 4,655 7,659 Total Other current and long-term liabilities $ 55,426 $ 72,350 |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 03, 2018 | |
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 2017 , 2016 and 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 consolidated financial statements, no interest or penalties related to unrecognized tax benefits are reflected in the consolidated balance sheets or statements of operations. The provisions for income tax expense for 2017 , 2016 and 2015 consist of the following: Fiscal Year Ended thousands 2017 2016 2015 Loss before income taxes: U.S. $ (96,166 ) $ (51,588 ) $ (41,643 ) Foreign 1,613 1,160 (770 ) Total $ (94,553 ) $ (50,428 ) $ (42,413 ) Income tax expense (benefit): Current: Federal $ 2 $ (155 ) $ (9,758 ) State 215 1,001 605 Foreign 1,046 542 432 Total 1,263 1,388 (8,721 ) Deferred: Federal (759 ) 67,463 (4,666 ) State — 12,640 (1,765 ) Total $ (759 ) $ 80,103 $ (6,431 ) Income tax expense (benefit) $ 504 $ 81,491 $ (15,152 ) 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 2017 2016 2015 Federal tax rate 33.7 % 35.0 % 35.0 % State income tax (net of federal benefit) (0.2 )% 1.7 % 1.8 % Federal tax rate change (37.2 )% — % — % Valuation allowance 4.4 % (198.5 )% (1.6 )% Foreign taxes (1.1 )% — % 0.5 % Other (0.1 )% 0.2 % — % Effective tax rate (0.5 )% (161.6 )% 35.7 % The major components of the deferred tax assets and liabilities as of February 3, 2018 and January 28, 2017 are as follows: Fiscal Year Ended thousands February 3, 2018 January 28, 2017 Deferred tax assets Bad debts $ 1,543 $ 3,487 Deferred compensation 756 468 Inventory — 3,159 Net operating loss 54,580 39,169 Property 2,598 296 Royalty-free license 26,451 44,280 Other 7,803 11,230 Sub-total deferred tax assets $ 93,731 $ 102,089 Valuation allowance (92,362 ) (100,906 ) Total deferred tax assets $ 1,369 $ 1,183 Deferred tax liabilities Property (730 ) — Other (639 ) (1,183 ) Total deferred tax liabilities (1,369 ) (1,183 ) Net deferred tax assets — — On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code that will affect our fiscal year ending February 3, 2018, including, but not limited to, (1) reducing the U.S. federal corporate tax rate, (2) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized, and (3) various other miscellaneous changes that are effective in fiscal 2017. The Tax Act reduces the federal corporate tax rate to 21% in the fiscal year ending February 3, 2018. Based on Section 15 of the Internal Revenue Code, our fiscal year ending February 3, 2018 will have a blended corporate tax rate of 33.7% , which is based on the applicable tax rates before and after the Tax Act and the number of days in the year. The Tax Act also establishes new tax rules that will affect fiscal 2018, including, but not limited to, (1) reduction of the U.S. federal corporate tax rate; (2) the elimination of corporate AMT; (3) a new limitation on deductible interest expense; (4) limitations on the deductibility of certain executive compensation; (5) limitations on the use of FTCs to reduce the U.S. income tax liability; and (6) limitations on net operating losses (NOLs) generated in tax years beginning after December 31, 2017, to 80% of taxable income. The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. In connection with our initial analysis of the impact of the Tax Act, we have recorded a discrete net tax benefit of $0.8 million in the period ending February 3, 2018. This net tax benefit consists of a net benefit for the reclassification of the corporate AMT from deferred tax to long-term receivable therefore reducing the valuation allowance by $0.8 million . For various reasons that are discussed more fully below, we have not completed our accounting for the income tax effects of certain elements of the Tax Act. If we were able to make reasonable estimates of the effects of elements for which our analysis is not yet complete, we recorded provisional adjustments. Our accounting for the following elements of the Tax Act is incomplete. However, we were able to make reasonable estimates of certain effects and, therefore, recorded provisional adjustments as follows: The Tax Act reduces the corporate rate to 21%, effective January 1, 2018. Our net deferred tax assets ("DTA") and deferred tax liabilities ("DTL") decreased by $35.2 million with a corresponding net adjustment to the valuation allowance for the year ended February 3, 2018. The AMT DTA of $0.8 million was reclassified to a long-term receivable which resulted in a deferred tax benefit of the same amount due to the release of the corresponding valuation allowance. While we were able to make a reasonable estimate of the impact of the reduction in the corporate rate and valuation allowances, it may be affected by other analysis related to the Tax Act. 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. In performing the assessment for 2017, a significant piece of negative evidence evaluated was the cumulative loss incurred over the three-year period ended February 3, 2018 . The loss was evaluated as book loss adjusted for non-deductible and non-recurring items such as goodwill impairment, sale of property, store closing costs, franchise income/expense and software expenses. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth. On the basis of this analysis and significant negative objective evidence, management has determined the full valuation allowance is still necessary for the year ended February 3, 2018 . The valuation allowance decreased by $8.5 million for the current year which was offset by the reduction in net DTAs mainly for the reduction in the federal tax rate but resulted in a tax benefit of $0.8 million due to the valuation allowance release for the reclassification of the AMT DTA. As of February 3, 2018, a valuation allowance of $92.4 million is recorded for the full amount of the net deferred tax assets. Changes in the valuation allowance are recorded as a non-cash charge to income tax expense. A valuation allowance of $0.7 million and $0.1 million was recognized through tax expense for the years ended January 28, 2017 and January 30, 2016, respectively due to the estimated future foreign taxable income available to use the foreign tax credit and the Puerto Rico AMT credit carryforwards. We will continue to evaluate our valuation allowance in future years for any change in circumstances that causes a change in judgment about the realizability of the deferred tax assets. At the end of 2017 and 2016 , we had federal net operating loss carryforwards (“NOL”) of $210.7 million and $99.4 million , respectively, which will expire between 2036 and 2038. At the end of 2017 and 2016 , we had state NOL carryforwards of $13.1 million and $6.8 million , respectively, which will expire between 2019 and 2038. We have credit carryforwards of $3.4 million which will expire between 2023 and 2038. We file federal, state and city income tax returns in the United States and foreign tax returns in Puerto Rico. SHO was also a part of the Sears Holdings' combined state returns for the years ended February 2, 2013 and February 1, 2014. Currently, the Company is under audit for the years ended February 2, 2013 and February 1, 2014 as part of the Sears Holdings' combined return audits, as well as the Company's federal tax return for the year ended January 30, 2016, and a separate state return audit for fiscal years 2013 through 2016. |
Related Party Agreements and Tr
Related Party Agreements and Transactions | 12 Months Ended |
Feb. 03, 2018 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY AGREEMENTS AND TRANSACTIONS | RELATED-PARTY AGREEMENTS AND TRANSACTIONS According to publicly available information, ESL Investments, Inc. and its investment affiliates including Edward S. Lampert (together, "ESL") beneficially own 58.8% of our outstanding shares of common stock and more than 50% of Sears Holdings' outstanding shares of common stock. We are party to various agreements with Sears Holdings (the "SHO-Sears Holdings Agreements") 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 the SHO-Sears Holdings Agreements were agreed to prior to the Separation (except for amendments entered into after the Separation that were 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 has engaged in frequent discussions, and has resolved 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 had not been 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. Many of these discussions have resulted in adjustments to the relationships that the Company believes together are in the Company's best interests. On May 11, 2016, SHO and Sears Holdings entered into amendments to most of the SHO-Sears Holdings Agreements. These amendments are referred to in our Current Report on Form 8-K (File No. 001-35641) filed with the Securities and Exchange Commission on May 17, 2016. We also filed a Current Report on Form 8-K (File No. 001-35641) with the Securities and Exchange Commission on March 9, 2017 regarding the Amendment to Amended and Restated Merchandising Agreement dated as of March 8, 2017 among the Company, Sears Holdings, and Stanley Black & Decker. Inc. 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. The SHO-Sears Holdings Agreements include an Amended and Restated 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 on February 1, 2020, subject to one three -year renewal term 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. The SHO-Sears Holdings Agreements also provide 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. Products which we acquired from Sears Holdings, including KCD Products and other products, accounted for approximately 78% , 80% , and 82% of our total purchases of inventory from all vendors for 2017 , 2016 , and 2015 , respectively. 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 pursuant to the SHO-Sears Holdings Agreements. These services include tax, accounting, procurement, risk management and insurance, advertising and marketing, 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 (our license to use "searsoutlet.com" on a web platform not operated by Sears Holdings will expire on February 1, 2020), 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. The SHO-Sears Holdings 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 thousands February 3, 2018 January 28, 2017 January 30, 2016 Net Commissions from Sears Holdings $ 66,557 $ 82,447 $ 91,291 Purchases related to cost of sales and occupancy 958,560 1,153,739 1,386,414 Services included in selling and administrative 60,822 77,134 88,486 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 following sentences of this paragraph, are settled on a net basis and have payment terms of 10 days after the invoice date. In accordance with the SHO–Sears Holdings Agreements and at the request of Sears Holdings, the Company can pay invoices on two or three -day terms and receive a deduction on invoices for early–payment discounts of 43 basis points or 37 basis points, respectively. The Company can, in its sole discretion, revert to ten –day, no–discount payment terms at any time upon notice to Sears Holdings. The discount received for payments made on accelerated terms, net of incremental interest expense, results in a net financial benefit to the Company. During 2017, the Company paid most invoices on either two or three –day terms and received discounts of $4.2 million , which are reflected in the Condensed Consolidated Statements of Operations. During 2016 the Company began paying invoices on accelerated terms on May 1, 2016 and received discounts of approximately $4.4 million . We paid Seritage Growth Properties $1.1 million and $1.0 million in 2017 and 2016 , respectively, 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 |
Feb. 03, 2018 | |
Debt Disclosure [Abstract] | |
FINANCING ARRANGEMENTS | FINANCING ARRANGEMENTS 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 provided (subject to availability under a borrowing base) for aggregate maximum borrowings of $250 million (the "Prior Facility"). Under the Prior Facility the Company initially borrowed $100 million which was used to pay a cash dividend to Sears Holdings prior to the Separation. On November 1, 2016, the Company and its primary operating subsidiaries, entered into an Amended and Restated Credit Agreement with a syndicate of lenders, including Bank of America, N.A., as administrative agent and collateral agent, which provides (subject to availability under a borrowing base) for aggregate maximum borrowings of $250 million (the "Senior ABL Facility"). The Senior ABL Facility, which amended and restated the Prior Facility in its entirety, provides for extended revolving credit commitments of specified lenders in an aggregate amount equal to $170 million (the “Extended Revolving Credit Commitments”) and non-extended revolving credit commitments of specified lenders in an aggregate amount equal to $80 million (the “Non-Extended Revolving Credit Commitments”). The Extended Revolving Credit Commitments will mature on the earlier of (1) February 29, 2020 and (2) six months prior to the expiration of specified agreements entered into with Sears Holdings and its subsidiaries in connection with the Separation (the “Subject Agreements”) unless they are extended to a date later than February 29, 2020 or terminated on a basis reasonably satisfactory to the administrative agent under the Senior ABL Facility. The Non-Extended Revolving Credit Commitments were not extended by the Non-Extending Lenders in accordance with the Senior ABL Facility and matured on October 11, 2017. Unamortized debt costs related to the Senior ABL Facility of $3.5 million and $5.4 million are included in Prepaid expenses and other current assets on the Consolidated Balance Sheets as of February 3, 2018 and January 28, 2017, respectively, and are being amortized over the remaining term of the Senior ABL Facility. As of February 3, 2018 we had $137.9 million outstanding under the Senior ABL Facility, which approximated the fair value of these borrowings. 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 February 3, 2018 was $24.9 million , with $7.2 million of letters of credit outstanding under the facility. The principal terms of the Senior ABL Facility are summarized below. Prepayments 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. Security and Guarantees The Senior ABL Facility is secured by a first lien security interest on substantially all the assets of the Company and its subsidiaries, including, without limitation, accounts receivable, inventory, general intangibles, investment property, equipment, cash, cash equivalents, deposit accounts and securities accounts, as well as certain other assets (other than intellectual property and fee-owned interests in real property) ancillary to any of the foregoing and all proceeds of any of the foregoing, including cash proceeds and the proceeds of applicable insurance. The Senior ABL Facility is guaranteed by the Company and each of its existing and future direct and indirect wholly owned domestic subsidiaries (other than specified immaterial subsidiaries). 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 the Company's election, either (1) an adjusted London inter-bank offered rate (LIBOR) plus a borrowing margin ranging from (x) 3.50% to 4.50% , in the case of the Extended Revolving Credit Commitments or (y) 2.00% to 2.50% , in the case of the Non-Extended Revolving Credit Commitments (which the blended rate was approximately 5.02% at February 3, 2018 and 3.94% at January 28, 2017), and in each case based on availability under the Senior ABL Facility, or (2) an alternate base rate plus a borrowing margin, ranging from (x) 2.50% to 3.50% , in the case of the Extended Revolving Credit Commitments or (y) 1.00% to 1.50% , in the case of the Non-Extended Revolving Credit Commitments (which the blended rate was approximately 8.00% at February 3, 2018 and 5.94% at January 28, 2017), and in each case based on availability under the Senior ABL Facility. 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 negative covenants that, among other things, limit or restrict the ability of the Company and its subsidiaries (including the guarantors) to, subject to certain exceptions, incur additional indebtedness (including guarantees), grant liens, make investments, make prepayments on other indebtedness, and engage in mergers or change the nature of the business of the Company and its subsidiaries (including the guarantors). The Senior ABL Facility also imposes various other requirements, which take effect if availability falls below designated thresholds, including a cash dominion requirement with additional borrowing base reporting requirements in addition to a requirement that the fixed charge ratio at the last day of any quarter be not less than 1.0 to 1.0 . The Senior ABL Facility also limits SHO’s ability to declare and pay cash dividends and to repurchase its common stock. The Senior ABL Facility would not have permitted us to pay cash dividends or to repurchase our common stock as of February 3, 2018. The Senior ABL Facility also contains affirmative covenants, including financial and other reporting requirements. Events of Default The Senior ABL Facility includes customary and other events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests, material judgments, change of control, failure to perform a "Material Contract" (which includes the Merchandising Agreement and other SHO-Sears Holdings Agreements) to the extent required to maintain it in full force and effect, the failure to enforce a Material Contract in accordance with its terms, or Sears Holdings terminates the "Separation Agreements" (which include, among other SHO-Sears Holdings Agreements, the Merchandising Agreement and the Services Agreements). See Note 16 regarding the Company's Term Loan Credit Agreement dated February 16, 2018. |
Summary of Segment Data
Summary of Segment Data | 12 Months Ended |
Feb. 03, 2018 | |
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 $0.0 million and $(0.1) million from Hometown in 2016 and 2015 , respectively, and $(0.2) million and $0.4 million from Outlet in 2016 and 2015 , respectively. Initial franchise revenues in 2015 and 2016 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. No initial franchise revenues are included in the other category for Hometown or Outlet during 2017. Selling and administrative expense includes losses on franchisee notes receivables and IT transformation costs of $22.6 million , $9.2 million and $20.1 million for Hometown in 2017 , 2016 and 2015 , respectively, and $19.1 million , $5.0 million and $16.2 million for Outlet in 2017 , 2016 and 2015 , respectively. Costs associated with accelerated store closings totaling $14.4 million in 2017 ( $6.7 million in Hometown; $7.7 million in Outlet) and $17.1 million in 2016 ( $16.0 million in Hometown; $1.1 million in Outlet), were included in Cost of sales and occupancy and Selling and administrative expense. 2017 thousands Hometown Outlet Total Net sales Appliances $ 805,490 $ 446,118 $ 1,251,608 Lawn and garden 204,371 19,024 223,395 Tools and paint 103,706 14,289 117,995 Other 63,655 63,298 126,953 Total 1,177,222 542,729 1,719,951 Costs and expenses Cost of sales and occupancy 931,078 440,330 1,371,408 Selling and administrative 283,294 136,273 419,567 Impairment of property and equipment 2,581 776 3,357 Depreciation and amortization 5,378 7,661 13,039 Total 1,222,331 585,040 1,807,371 Operating loss $ (45,109 ) $ (42,311 ) $ (87,420 ) Total assets $ 281,805 $ 130,883 $ 412,688 Capital expenditures $ 4,156 $ 5,072 $ 9,228 2016 thousands Hometown Outlet Total Net sales Appliances $ 963,391 $ 517,625 $ 1,481,016 Lawn and garden 247,157 20,454 267,611 Tools and paint 150,520 17,856 168,376 Other 78,495 74,558 153,053 Total 1,439,563 630,493 2,070,056 Costs and expenses Cost of sales and occupancy 1,145,678 515,636 1,661,314 Selling and administrative 318,589 140,197 458,786 Impairment of property and equipment 4,536 4,820 9,356 Depreciation and amortization 6,032 7,426 13,458 Loss (gain) on the sale of assets 69 (25,272 ) (25,203 ) Total 1,474,904 642,807 2,117,711 Operating loss $ (35,341 ) $ (12,314 ) $ (47,655 ) Total assets $ 303,166 $ 165,260 $ 468,426 Capital expenditures $ 7,377 $ 4,821 $ 12,198 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 Impairment of property and equipment 1,983 2,001 3,984 Depreciation and amortization 3,585 6,977 10,562 Total Costs and expenses 1,645,924 684,036 2,329,960 Operating loss $ (15,648 ) $ (26,524 ) $ (42,172 ) Total assets $ 421,615 $ 212,218 $ 633,833 Capital expenditures $ 4,563 $ 6,867 $ 11,430 |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Feb. 03, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | QUARTERLY FINANCIAL DATA (UNAUDITED) The following tables reflect the unaudited quarterly consolidated statements of operations for the periods indicated. Fiscal Year Ended February 3, 2018 thousands, except per share amounts First Quarter Second Quarter Third Quarter Fourth Quarter NET SALES $448,233 $489,985 $385,959 $395,774 COSTS AND EXPENSES Cost of sales and occupancy 354,478 397,637 299,271 320,022 Selling and administrative 110,881 115,208 93,101 100,377 Impairment of property and equipment — — — 3,357 Depreciation and amortization 2,204 4,704 3,002 3,129 Total costs and expenses 467,563 517,549 395,374 426,885 Operating loss (19,330 ) (27,564 ) (9,415 ) (31,111 ) Interest expense (1,591 ) (1,874 ) (2,149 ) (2,444 ) Other income 319 231 194 181 Loss before income taxes (20,602 ) (29,207 ) (11,370 ) (33,374 ) Income tax (expense) benefit (832 ) (239 ) 437 130 NET LOSS $ (21,434 ) $ (29,446 ) $ (10,933 ) $ (33,244 ) NET LOSS PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS Basic: $ (0.94 ) $ (1.30 ) $ (0.48 ) $ (1.46 ) Diluted: $ (0.94 ) $ (1.30 ) $ (0.48 ) $ (1.46 ) Basic weighted average common shares outstanding 22,702 22,702 22,702 22,702 Diluted weighted average common shares outstanding 22,702 22,702 22,702 22,702 Fiscal Year Ended January 28, 2017 thousands, except per share amounts First Quarter Second Quarter Third Quarter Fourth Quarter NET SALES $536,981 $556,388 $487,795 $488,892 COSTS AND EXPENSES Cost of sales and occupancy 420,790 441,508 392,562 406,454 Selling and administrative 117,992 118,808 109,158 112,828 Impairment of property and equipment — — — 9,356 Depreciation and amortization 3,257 3,293 3,188 3,720 (Gain) loss on the sale of assets — (25,269 ) — 66 Total costs and expenses 542,039 538,340 504,908 532,424 Operating (loss) income (5,058 ) 18,048 (17,113 ) (43,532 ) Interest expense (766 ) (886 ) (840 ) (1,771 ) Other income 397 378 373 342 (Loss) income before income taxes (5,427 ) 17,540 (17,580 ) (44,961 ) Income tax benefit (expense) 1,857 (6,898 ) (75,617 ) (833 ) NET (LOSS) INCOME $ (3,570 ) $ 10,642 $ (93,197 ) $ (45,794 ) NET (LOSS) INCOME PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS Basic: $ (0.16 ) $ 0.47 $ (4.11 ) $ (2.02 ) Diluted: $ (0.16 ) $ 0.47 $ (4.11 ) $ (2.02 ) Basic weighted average common shares outstanding 22,666 22,696 22,702 22,691 Diluted weighted average common shares outstanding 22,666 22,699 22,702 22,691 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Feb. 03, 2018 | |
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. |
Loss per Common Share
Loss per Common Share | 12 Months Ended |
Feb. 03, 2018 | |
Earnings Per Share [Abstract] | |
LOSS PER COMMON SHARE | LOSS PER COMMON SHARE Basic loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding for each period. Diluted income per common share also includes the dilutive effect of potential common shares. In periods where the Company records a net loss, the diluted per share amount is equal to the basic per share amount. The following table sets forth the components used to calculate basic and diluted loss per common share attributable to our stockholders. Fiscal Year Ended thousands except income per common share February 3, 2018 January 28, 2017 January 30, 2016 Basic weighted average shares 22,702 22,691 22,666 Dilutive effect of restricted stock — — — Diluted weighted average shares 22,702 22,691 22,666 Net loss $ (95,057 ) $ (131,919 ) $ (27,261 ) Loss per common share: Basic $ (4.19 ) $ (5.81 ) $ (1.20 ) Diluted $ (4.19 ) $ (5.81 ) $ (1.20 ) For 2016 and 2015, unvested shares of restricted stock of 14,000 , and 55,958 , respectively, were excluded from the computation of diluted earnings per share due to them having an anti-dilutive effect. For 2017, unvested shares of restricted stock of 14,000 were excluded from diluted earnings per share through the date of forfeiture. |
Equity
Equity | 12 Months Ended |
Feb. 03, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY | EQUITY Stock-based Compensation Under our stock-based employee compensation plan, referred to as the Company's Amended and Restated 2012 Stock Plan (the "Plan"), there are four million shares of stock reserved for issuance pursuant to the Plan. We are authorized to grant stock options and to make other awards (in addition to restricted stock and stock units) pursuant to the Plan. The Company has made no stock-option awards under the Plan. A total of 89,221 shares of restricted stock were granted under the Plan in the second quarter of 2013 (the "2013 RS Grant") and 14,000 shares of restricted stock were granted under the Plan in the second quarter of 2015 (the "2015 RS Grant"). As of May 16, 2016, 52,691 shares of the 2013 RS Grant had been forfeited. On that date the remaining 36,530 shares of restricted stock comprising the 2013 RS Grant vested in accordance with the terms and conditions of the governing restricted-stock agreements and the Plan. The 14,000 shares of restricted stock comprising the 2015 RS Grant were forfeited in the first quarter of 2017. During 2015 the Company granted a total of 159,475 stock units under the Plan. All of these stock units were payable solely in cash based on the Nasdaq stock price at the vesting date. As of February 3, 2018 , 34,091 of these stock units had been forfeited. On April 13, 2018, the remaining 125,384 stock units vested in accordance with and subject to the terms and conditions of governing stock-unit agreements and the Plan. On January 30, 2017 the Company granted a total of 262,788 stock units under the Plan. As of February 3, 2018 , 40,000 of these stock units had been forfeited and 76,485 had vested. The remaining 146,303 stock units will vest, if at all, in two substantially equal installments on January 30 in 2019 and 2020 in accordance with and subject to the terms and conditions of governing stock unit agreements, including forfeiture conditions, and the Plan. The fair value of these awards vary based on changes in our Nasdaq stock price at the end of each reporting period. On January 18, 2018 the Company granted a total of 361,393 stock units under the Plan. These stock units will vest in three substantially equal installments on January 30 in 2019, 2020 and 2021 in accordance with and subject to the terms and conditions of governing stock unit agreements, including forfeiture conditions, and the Plan. The fair value of these awards vary based on changes in our Nasdaq stock price at the end of each reporting period. The shares of restricted stock referred to above in this Note 12 constituted outstanding shares of the Company's common stock. The recipients of the restricted stock grants had full voting and dividend rights with respect to, but were unable to transfer or pledge, their shares of restricted stock prior to the applicable vesting dates. The stock units referred to above in this Note 12, which were, and are, payable solely in cash based on the Nasdaq closing price of our common stock at the applicable vesting dates, do not constitute outstanding shares of the Company's common stock. The recipients of the stock unit grants have, with respect to their stock units, no rights to receive the Company's common stock or other securities of the Company, no rights as a stockholder of the Company, no dividend rights, and no voting rights. 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 grants of restricted stock and stock units referred to above in this Note 12, the Company has not made any grant or award 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 2017 we reversed $0.1 million in total stock-based compensation expense related to the forfeiture of unvested restricted stock. In addition, during 2017 we recognized $0.3 million in total compensation expense related to the stock unit grants described above. At February 3, 2018, we had $1.2 million in total estimated unrecognized compensation cost related to the remaining non-vested stock units, which cost we expect to recognize over the next approximately 3.0 years . Changes during 2017 with respect to the 2015 RS Grant are noted below. (Shares in thousands) Restricted Stock Weighted-Average Fair Value on Date of Grant Balance at January 28, 2017 14 $ 9.38 Granted — — Vested — — Forfeited (14 ) 9.38 Balance at February 3, 2018 — $ — 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. See Notes 7 and 16 to these Condensed Consolidated Financial Statements regarding the limits included in the Senior ABL Facility and the Company's Term Loan Credit Agreement on SHO’s ability to repurchase its common stock. Shares that are repurchased by the Company pursuant to the repurchase program would be retired and would resume the status of authorized and unissued shares of common stock. No shares were repurchased during fiscal years 2017 , 2016 or 2015 . At February 3, 2018 , we had $12.5 million of remaining authorization under the repurchase program. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Feb. 03, 2018 | |
Retirement Benefits [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 as incurred during employees' tenure of employment. Expenses for the retirement savings plan were as follows: thousands 2017 2016 2015 401(k) Savings Plan $ 1,056 $ 957 $ 905 |
Sale of Assets
Sale of Assets | 12 Months Ended |
Feb. 03, 2018 | |
Other Income and Expenses [Abstract] | |
Sale of Assets | SALE OF ASSETS On July 27, 2016, we completed the sale of an owned property located in San Leandro, California. Net proceeds from the sale were $26.1 million , and we recorded a gain on the sale of $25.2 million when the sale was completed in accordance with the terms and conditions of the Purchase and Sale Agreement. We did not sell any owned property in fiscal 2017. |
Store Closing Charges
Store Closing Charges | 12 Months Ended |
Feb. 03, 2018 | |
Restructuring and Related Activities [Abstract] | |
Store Closing Charges | STORE CLOSING CHARGES Accelerated Closed Store Charges We continue to take proactive steps to make the best use of capital by closing unprofitable stores. In accordance with accounting standards governing costs associated with exit or disposal activities, expenses related to future rent payments for which we no longer expect to receive any economic benefit are accrued as of when we ceased to use the leased space and have been reduced for estimated sublease income. Accelerated store closure costs were as follows: Thousands Lease Termination Costs (1) Inventory Related (1) Accelerated Depreciation (2) Other Charges (3) Total Store Closing Costs Fiscal year ended February 3, 2018 $ 9,665 $ 4,527 $ 979 $ 224 $ 15,395 Thousands Lease Termination Costs (1) Inventory Related (1) Accelerated Depreciation (2) Other Charges (3) Total Store Closing Costs Fiscal year ended January 28, 2017 $ 8,477 $ 7,224 $ 565 $ 1,400 $ 17,666 (1) Recorded within cost of sales and occupancy in the Condensed Consolidated Statements of Operations. Lease termination costs are net of estimated sublease income, and include the reversal of closed store reserves when a lease agreement is terminated for an amount less than the remaining reserve established for the store. (2) Recorded within depreciation and amortization in the Condensed Consolidated Statements of Operations. (3) Recorded within selling and administrative in the Condensed Consolidated Statements of Operations. Closed Store Reserves Store closing reserves of $4.7 million and $7.7 million are included within other current liabilities in the Condensed Consolidated Balance Sheets at February 3, 2018 and January 28, 2017, respectively. Changes in the store closing reserves are as follows: Thousands Total Balance at January 30, 2016 $ — Store closing costs 9,877 Payments/utilization (2,218 ) Balance at January 28, 2017 $ 7,659 Store closing costs 9,889 Payments/utilization (12,893 ) Balance at February 3, 2018 $ 4,655 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Feb. 03, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On February 16, 2018 the Company’s three operating subsidiaries, Sears Authorized Hometown Stores, LLC, Sears Home Appliance Showrooms, LLC, and Sears Outlet Stores, L.L.C., as borrowers, and the Company, as guarantor, entered into a Term Loan Credit Agreement with Gordon Brothers Finance Company, as agent, lead arranger, and sole bookrunner, and Gordon Brothers Finance Company, LLC as lender (the “Term Loan Agreement”). The Term Loan Agreement provides for a $40 million term loan (the “Term Loan”), which amount the Company has borrowed, and is outstanding, in accordance with and subject to the terms and conditions of the Term Loan Agreement. The Term Loan will mature on the earliest of (1) the maturity date specified in the Senior ABL Facility, (2) February 16, 2023, and (3) acceleration of the maturity date following an event of default in accordance with the Term Loan Agreement. Costs related to and incurred for the Term Loan totaled approximately $1.0 million and will be amortized over the remaining term of the Term Loan. The principal terms of the Term Loan Agreement are summarized below. Security and Guarantees The Term Loan Agreement is secured by a second lien security interest (subordinate only to the liens securing the Senior ABL Facility) on substantially all the assets of the Company and its subsidiaries (the same assets as the assets specified with respect to the Senior ABL Facility), including without limitation accounts receivable, inventory, general intangibles, investment property, equipment, cash, cash equivalents, deposit accounts and securities accounts, as well as other assets (other than intellectual property and fee-owned interests in real property) ancillary to any of the foregoing and all proceeds of any of the foregoing, including cash proceeds and the proceeds of applicable insurance. The Term Loan Agreement is guaranteed by the Company and each of its existing and future direct and indirect wholly owned domestic subsidiaries (other than specified immaterial subsidiaries). Prepayments The Term Loan is subject to mandatory prepayment in amounts equal to the amount by which the outstanding Term Loan exceeds the borrowing base specified in the Term Loan Agreement plus a reserve to be maintained against the borrowing base for the Senior ABL Facility (the “push-down reserve”), which reserve will be equal to total outstanding under the Term Loan Agreement that exceed the Term Loan Agreement’s borrowing base, if such excess were to arise. The Company may not reborrow amounts prepaid. Interest; Fees The interest rate applicable to the Term Loan under the Term Loan Agreement is a fluctuating rate of interest (payable and adjusted monthly) equal to the greater of (1) three-month LIBOR plus 8.5% per annum and (2) a minimum interest rate of 9.5% per annum. Customary fees are payable in respect of the Term Loan Agreement, including a commitment fee and an early prepayment fee. Covenants The Term Loan Agreement includes a number of negative covenants that, among other things, limit or restrict the ability of the Company, the Borrowers, and the Company’s other subsidiaries to, subject to exceptions, incur additional indebtedness (including guarantees), grant liens, make investments, make dividends or other distributions with respect to, or repurchase, the Company’s capital stock, make prepayments on other indebtedness, engage in mergers, or change the nature of the business. In addition, upon excess availability falling below a specified level or the occurrence of an event of default the Company would be subject to a cash dominion requirement. The Term Loan Agreement also provides that the Borrowers will not permit availability under the Term Loan Agreement and the Senior ABL Facility to be less than 10% of a combined loan cap. The Term Loan Agreement also contains affirmative covenants including, among others, financial and other reporting and notification requirements, maintenance of properties, inspection rights, and physical inventories. The Company and the Borrowers also agree that the Company and the Borrowers will cause the push-down reserve to be established and maintained when and if required by the Term Loan Agreement. The Term Loan Agreement borrowing base generally means specified amounts of credit card receivables and inventory (net of reserves), minus the loan cap for the Senior ABL Facility and availability reserves. Events of Default The Term Loan Agreement includes customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties in any material respect, cross default to the Senior ABL Facility and other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of the Term Loan Agreement and the other related loan documents (including the guarantees or security interests provided therein), material judgments, and change of control. |
Background, and Basis of Pres23
Background, and Basis of Presentation and Significant Accounting Policies (Policies) | 12 Months Ended |
Feb. 03, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background | 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 February 3, 2018 , the Company and our independent dealers and franchisees operated a total of 900 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. The Company separated from Sears Holdings Corporation (“Sears Holdings”) in October 2012 (the “Separation”). To our knowledge Sears Holdings does not own any shares of our common stock. The Company has specified rights to use the "Sears" name under a license agreement from Sears Holdings. |
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"). Reclassifications - Certain prior period reclassifications were made to conform with the current period presentation. These reclassifications had no effect on reported operations, cash flows, total assets, or stockholders' equity as previously reported. |
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. |
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. |
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 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 $5.8 million at February 3, 2018 and $8.2 million at January 28, 2017 . 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 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. 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 insignificantly higher at February 3, 2018 and January 28, 2017 . |
Vendor Rebates and Allowances | Vendor Rebates and Allowances We receive rebates and allowances from vendors through a variety of programs and arrangements intended to offset the costs of promoting and selling the vendors' products. In addition, Sears Holdings allocates a portion of the rebates and allowances it receives from vendors based on shipments to or sales of the related products to the Company. 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. |
Intangible Assets | In 2015, the Company repurchased franchised locations and 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. In fiscal 2016 and 2017, the Company repurchased a total of 24 and 32 franchised locations, respectively. There was no reacquisition rights value associated with the transactions in fiscal 2017 and 2016, as several of the reacquired stores were closed and the remaining had negative cash flows and minimal time remaining on the lease. 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 remaining weighted-average amortization period of 0.3 years. Amortization expense for reacquisition rights was $1.3 million , $2.8 million , and $1.7 million for 2017, 2016, and 2015, respectively. Amortization expense is estimated to be $0.3 million in fiscal 2018, at which point the reacquisition rights will be fully amortized. |
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 recorded impairment charges with respect to long-lived assets of $3.4 million , $9.4 million and $4.0 million in fiscal years 2017 , 2016 and 2015 , respectively, included in Impairment of property and equipment in the accompanying Consolidated Statements of Operations. 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 reserve 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 our own insurance arrangements with third-party insurance companies 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, Company websites, services and extended-service plans, financing programs, 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 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. |
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. |
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. |
Pre-Opening 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 $48.2 million , $65.2 million and $70.5 million for 2017 , 2016 and 2015 , respectively. These costs are included within selling and administrative expenses in the accompanying Consolidated Statements of Operations. |
Income Taxes | 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. For the year-ended February 3, 2018 , a valuation allowance of $92.4 million has been recorded for the full amount of the net deferred tax assets. In the future, we may record additional net deferred tax assets and if future utilization of deferred tax assets is uncertain, we may record additional valuation allowance against such deferred tax assets. 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 to Sears Holdings, 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 1, the Company recorded impairment charges of $3.4 million , $9.4 million and $4.0 million on its property and equipment in 2017 , 2016 , and 2015 , respectively. The Company utilized Level 3 inputs to measure the fair value of property and equipment, and intangible assets. |
New Accounting Pronouncements | New Accounting Pronouncements ASU 2016-17 "Consolidation (Topic 810) Interests Held through Related Parties That Are under Common Control" In October 2016, the FASB issued an accounting standards update to amend the accounting standards on how a reporting entity that is the single decision maker of a variable interest entity ("VIE") should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The primary beneficiary of a VIE is the reporting entity that has a controlling financial interest in a VIE and, therefore, consolidates the VIE. A reporting entity has an indirect interest in a VIE if it has a direct interest in a related party that, in turn, has a direct interest in the VIE. Under the amendments, a single decision maker is not required to consider indirect interests held through related parties that are under common control with the single decision maker to be the equivalent of direct interests in their entirety. Instead, a single decision maker is required to include those interests on a proportionate basis consistent with indirect interests held through other related parties. The Company adopted the update in the first quarter of 2017. The adoption of the new standard did not have an impact on the Company's consolidated financial position, results of operations or cash flows. ASU 2016-16 "Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory" In October 2016, the FASB issued an accounting standards update to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Current accounting standards prohibit the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. In addition, interpretations of this guidance have developed in practice for transfers of certain intangible and tangible assets. This prohibition on recognition is an exception to the principle of comprehensive recognition of current and deferred income taxes in accounting standards. To more faithfully represent the economics of intra-entity asset transfers, the amendments in this update require that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this update do not change accounting standards for the pre-tax effects of an intra-entity asset transfer under accounting standards applicable to consolidation, or for an intra-entity transfer of inventory. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted as of the beginning of an annual reporting period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. This guidance is not expected to have a material impact on our consolidated financial statements. ASU 2016-02 "Leases (Topic 842)" 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, and expect the update will have a material impact on our consolidated financial statements. ASU 2014-09 , "Revenue from Contracts with Customers (Topic 606)" In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)", which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) 605, Revenue Recognition effective January 1, 2018. Several additional ASUs have subsequently been issued amending and clarifying the standard. The core principle of ASU 2014-09 is that an entity 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. The guidance provides a five-step process to achieve that core principle. We adopted this standard on February 4, 2018, using the modified retrospective approach, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption. We have completed our review of the standard and determined the adoption will impact our balance sheet presentation related to merchandise returns. We currently present our returns reserve net of anticipated resaleable merchandise returns. The new guidance requires that we present a right of return asset separately from the liability for anticipated customer returns. Upon adoption of the standard, the Company will reclassify/record a right of return asset of approximately $1.0 million and $1.5 million . The adoption of this standard did not result in a material cumulative effect adjustment as of February 4, 2018, and with the exception of merchandise returns, the guidance is not expected to have a material impact on our consolidated financial statements. We will include the additional required disclosures beginning with our Form 10-Q for the first quarter of 2018. |
Background, and Basis of Pres24
Background, and Basis of Presentation and Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Fiscal Period | The following fiscal periods are presented herein. Fiscal Year Ended Weeks 2017 February 3, 2018 53 2016 January 28, 2017 52 2015 January 30, 2016 52 |
Value of Property and Equipment | Property and equipment consists of the following: thousands February 3, 2018 January 28, 2017 Land $ 1,741 $ 1,741 Buildings and improvements 35,065 41,071 Furniture, fixtures and equipment 37,303 37,174 Capitalized leases 1,276 1,175 Total property and equipment 75,385 81,161 Less: accumulated depreciation (39,336 ) (40,226 ) Total property and equipment, net $ 36,049 $ 40,935 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. Total depreciation expense was $11.8 million , $10.6 million , and $8.8 million for fiscal years 2017 , 2016 and 2015 , respectively. As of February 3, 2018 , management has identified one property that is deemed held for sale based on criteria in Accounting Standards Codification ("ASC") 360-10-45-9. This property is reflected in each category of Property and Equipment with the exception of capitalized leases in the table above and had a carrying value of $1.5 million as of February 3, 2018 . As of February 3, 2018 , the expected fair value less the cost of sale exceeded the carrying value of the Property and Equipment. |
Schedule of Intangible Assets | Intangible assets, included in other assets on the Consolidated Balance Sheets, consist of the following: thousands February 3, 2018 January 28, 2017 Reacquisition rights $ 6,100 $ 6,100 Less: accumulated amortization (5,845 ) (4,573 ) Total intangible assets, net $ 255 $ 1,527 |
Schedule of Rent Expense | Rental expense for operating leases was as follows: Fiscal Year thousands 2017 2016 2015 Minimum rentals 59,533 69,111 63,336 Less-Sublease rentals (7,399 ) (13,181 ) (25,505 ) Total 52,134 55,930 37,831 |
Schedule of Capital Leases and Operating Leases | Minimum lease obligations excluding taxes, insurance and other expenses are as follows: Fiscal Year (thousands) Capital Leases Operating Leases 2018 $ 267 $ 44,076 2019 308 32,697 2020 17 27,422 2021 11 20,917 2022 10 14,264 Thereafter — 8,821 Total Minimum Lease Payments 613 148,197 Less - Sublease Income on Leased Properties — (7,308 ) Net Minimum Lease Payments $ 613 $ 140,889 Capital lease obligations 613 Less Current Portion of Capital Lease Obligations (267 ) Long-term Capital Lease Obligations $ 346 |
Accounts and Franchisee Recei25
Accounts and Franchisee Receivables and Other Assets (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Receivables [Abstract] | |
Schedule of accounts and franchisee receivables and other assets | Accounts and franchisee receivables and other assets consist of the following: thousands February 3, 2018 January 28, 2017 Short-term franchisee receivables $ 1,205 $ 1,920 Miscellaneous receivables 14,314 10,475 Long-term franchisee receivables 7,962 18,406 Other assets 5,106 7,643 Allowance for losses on short-term franchisee receivables (1) (847 ) (947 ) Allowance for losses on long-term franchisee receivables (1) (4,928 ) (7,295 ) Total Accounts and franchisee receivables and other assets $ 22,812 $ 30,202 (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. We establish allowances for losses on franchisee receivables based on our receivable-by-receivable assessment during the year and determine that some of the franchisee receivables are potentially uncollectible in future periods due to declining results of operations of, or other adverse financial events with respect to, franchise stores that indicate 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 Franc26
Allowance for Losses on Franchisee Receivables (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Receivables [Abstract] | |
Schedule of Allowance for Losses on Franchisee Receivables | The allowance for losses on Franchisee Receivables consists of the following: thousands February 3, 2018 January 28, 2017 Allowance for losses on franchisee receivables, beginning of period $ 8,242 $ 12,141 Expense (benefit) during the period 7,361 (791 ) Write off of franchisee receivables (9,828 ) (3,383 ) Other — 275 Allowance for losses on franchisee receivables, end of period $ 5,775 $ 8,242 |
Other Current and Long-Term L27
Other Current and Long-Term Liabilities (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Long-term Liabilities | Other current and long-term liabilities consist of the following: thousands February 3, 2018 January 28, 2017 Customer deposits $ 16,655 $ 19,943 Sales and other taxes 9,221 11,380 Accrued expenses 17,755 27,602 Payroll and related items 7,140 5,766 Store closing and severance costs 4,655 7,659 Total Other current and long-term liabilities $ 55,426 $ 72,350 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provisions for Income Tax Expense | The provisions for income tax expense for 2017 , 2016 and 2015 consist of the following: Fiscal Year Ended thousands 2017 2016 2015 Loss before income taxes: U.S. $ (96,166 ) $ (51,588 ) $ (41,643 ) Foreign 1,613 1,160 (770 ) Total $ (94,553 ) $ (50,428 ) $ (42,413 ) Income tax expense (benefit): Current: Federal $ 2 $ (155 ) $ (9,758 ) State 215 1,001 605 Foreign 1,046 542 432 Total 1,263 1,388 (8,721 ) Deferred: Federal (759 ) 67,463 (4,666 ) State — 12,640 (1,765 ) Total $ (759 ) $ 80,103 $ (6,431 ) Income tax expense (benefit) $ 504 $ 81,491 $ (15,152 ) |
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 2017 2016 2015 Federal tax rate 33.7 % 35.0 % 35.0 % State income tax (net of federal benefit) (0.2 )% 1.7 % 1.8 % Federal tax rate change (37.2 )% — % — % Valuation allowance 4.4 % (198.5 )% (1.6 )% Foreign taxes (1.1 )% — % 0.5 % Other (0.1 )% 0.2 % — % Effective tax rate (0.5 )% (161.6 )% 35.7 % |
Schedule of Deferred Tax Assets and Liabilities | The major components of the deferred tax assets and liabilities as of February 3, 2018 and January 28, 2017 are as follows: Fiscal Year Ended thousands February 3, 2018 January 28, 2017 Deferred tax assets Bad debts $ 1,543 $ 3,487 Deferred compensation 756 468 Inventory — 3,159 Net operating loss 54,580 39,169 Property 2,598 296 Royalty-free license 26,451 44,280 Other 7,803 11,230 Sub-total deferred tax assets $ 93,731 $ 102,089 Valuation allowance (92,362 ) (100,906 ) Total deferred tax assets $ 1,369 $ 1,183 Deferred tax liabilities Property (730 ) — Other (639 ) (1,183 ) Total deferred tax liabilities (1,369 ) (1,183 ) Net deferred tax assets — — |
Related Party Agreements and 29
Related Party Agreements and Transactions (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
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 thousands February 3, 2018 January 28, 2017 January 30, 2016 Net Commissions from Sears Holdings $ 66,557 $ 82,447 $ 91,291 Purchases related to cost of sales and occupancy 958,560 1,153,739 1,386,414 Services included in selling and administrative 60,822 77,134 88,486 |
Summary of Segment Data (Tables
Summary of Segment Data (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Data | 2017 thousands Hometown Outlet Total Net sales Appliances $ 805,490 $ 446,118 $ 1,251,608 Lawn and garden 204,371 19,024 223,395 Tools and paint 103,706 14,289 117,995 Other 63,655 63,298 126,953 Total 1,177,222 542,729 1,719,951 Costs and expenses Cost of sales and occupancy 931,078 440,330 1,371,408 Selling and administrative 283,294 136,273 419,567 Impairment of property and equipment 2,581 776 3,357 Depreciation and amortization 5,378 7,661 13,039 Total 1,222,331 585,040 1,807,371 Operating loss $ (45,109 ) $ (42,311 ) $ (87,420 ) Total assets $ 281,805 $ 130,883 $ 412,688 Capital expenditures $ 4,156 $ 5,072 $ 9,228 2016 thousands Hometown Outlet Total Net sales Appliances $ 963,391 $ 517,625 $ 1,481,016 Lawn and garden 247,157 20,454 267,611 Tools and paint 150,520 17,856 168,376 Other 78,495 74,558 153,053 Total 1,439,563 630,493 2,070,056 Costs and expenses Cost of sales and occupancy 1,145,678 515,636 1,661,314 Selling and administrative 318,589 140,197 458,786 Impairment of property and equipment 4,536 4,820 9,356 Depreciation and amortization 6,032 7,426 13,458 Loss (gain) on the sale of assets 69 (25,272 ) (25,203 ) Total 1,474,904 642,807 2,117,711 Operating loss $ (35,341 ) $ (12,314 ) $ (47,655 ) Total assets $ 303,166 $ 165,260 $ 468,426 Capital expenditures $ 7,377 $ 4,821 $ 12,198 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 Impairment of property and equipment 1,983 2,001 3,984 Depreciation and amortization 3,585 6,977 10,562 Total Costs and expenses 1,645,924 684,036 2,329,960 Operating loss $ (15,648 ) $ (26,524 ) $ (42,172 ) Total assets $ 421,615 $ 212,218 $ 633,833 Capital expenditures $ 4,563 $ 6,867 $ 11,430 |
Quarterly Financial Data (Una31
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data | The following tables reflect the unaudited quarterly consolidated statements of operations for the periods indicated. Fiscal Year Ended February 3, 2018 thousands, except per share amounts First Quarter Second Quarter Third Quarter Fourth Quarter NET SALES $448,233 $489,985 $385,959 $395,774 COSTS AND EXPENSES Cost of sales and occupancy 354,478 397,637 299,271 320,022 Selling and administrative 110,881 115,208 93,101 100,377 Impairment of property and equipment — — — 3,357 Depreciation and amortization 2,204 4,704 3,002 3,129 Total costs and expenses 467,563 517,549 395,374 426,885 Operating loss (19,330 ) (27,564 ) (9,415 ) (31,111 ) Interest expense (1,591 ) (1,874 ) (2,149 ) (2,444 ) Other income 319 231 194 181 Loss before income taxes (20,602 ) (29,207 ) (11,370 ) (33,374 ) Income tax (expense) benefit (832 ) (239 ) 437 130 NET LOSS $ (21,434 ) $ (29,446 ) $ (10,933 ) $ (33,244 ) NET LOSS PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS Basic: $ (0.94 ) $ (1.30 ) $ (0.48 ) $ (1.46 ) Diluted: $ (0.94 ) $ (1.30 ) $ (0.48 ) $ (1.46 ) Basic weighted average common shares outstanding 22,702 22,702 22,702 22,702 Diluted weighted average common shares outstanding 22,702 22,702 22,702 22,702 Fiscal Year Ended January 28, 2017 thousands, except per share amounts First Quarter Second Quarter Third Quarter Fourth Quarter NET SALES $536,981 $556,388 $487,795 $488,892 COSTS AND EXPENSES Cost of sales and occupancy 420,790 441,508 392,562 406,454 Selling and administrative 117,992 118,808 109,158 112,828 Impairment of property and equipment — — — 9,356 Depreciation and amortization 3,257 3,293 3,188 3,720 (Gain) loss on the sale of assets — (25,269 ) — 66 Total costs and expenses 542,039 538,340 504,908 532,424 Operating (loss) income (5,058 ) 18,048 (17,113 ) (43,532 ) Interest expense (766 ) (886 ) (840 ) (1,771 ) Other income 397 378 373 342 (Loss) income before income taxes (5,427 ) 17,540 (17,580 ) (44,961 ) Income tax benefit (expense) 1,857 (6,898 ) (75,617 ) (833 ) NET (LOSS) INCOME $ (3,570 ) $ 10,642 $ (93,197 ) $ (45,794 ) NET (LOSS) INCOME PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS Basic: $ (0.16 ) $ 0.47 $ (4.11 ) $ (2.02 ) Diluted: $ (0.16 ) $ 0.47 $ (4.11 ) $ (2.02 ) Basic weighted average common shares outstanding 22,666 22,696 22,702 22,691 Diluted weighted average common shares outstanding 22,666 22,699 22,702 22,691 |
Loss per Common Share (Tables)
Loss per Common Share (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
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 loss per common share attributable to our stockholders. Fiscal Year Ended thousands except income per common share February 3, 2018 January 28, 2017 January 30, 2016 Basic weighted average shares 22,702 22,691 22,666 Dilutive effect of restricted stock — — — Diluted weighted average shares 22,702 22,691 22,666 Net loss $ (95,057 ) $ (131,919 ) $ (27,261 ) Loss per common share: Basic $ (4.19 ) $ (5.81 ) $ (1.20 ) Diluted $ (4.19 ) $ (5.81 ) $ (1.20 ) |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Restricted Stock Award Activity | Changes during 2017 with respect to the 2015 RS Grant are noted below. (Shares in thousands) Restricted Stock Weighted-Average Fair Value on Date of Grant Balance at January 28, 2017 14 $ 9.38 Granted — — Vested — — Forfeited (14 ) 9.38 Balance at February 3, 2018 — $ — |
Defined Contribution Plan (Tabl
Defined Contribution Plan (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of Defined Contribution Plan | Expenses for the retirement savings plan were as follows: thousands 2017 2016 2015 401(k) Savings Plan $ 1,056 $ 957 $ 905 |
Store Closing Charges (Tables)
Store Closing Charges (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Accelerated Store Closure Costs | Accelerated store closure costs were as follows: Thousands Lease Termination Costs (1) Inventory Related (1) Accelerated Depreciation (2) Other Charges (3) Total Store Closing Costs Fiscal year ended February 3, 2018 $ 9,665 $ 4,527 $ 979 $ 224 $ 15,395 Thousands Lease Termination Costs (1) Inventory Related (1) Accelerated Depreciation (2) Other Charges (3) Total Store Closing Costs Fiscal year ended January 28, 2017 $ 8,477 $ 7,224 $ 565 $ 1,400 $ 17,666 (1) Recorded within cost of sales and occupancy in the Condensed Consolidated Statements of Operations. Lease termination costs are net of estimated sublease income, and include the reversal of closed store reserves when a lease agreement is terminated for an amount less than the remaining reserve established for the store. (2) Recorded within depreciation and amortization in the Condensed Consolidated Statements of Operations. (3) Recorded within selling and administrative in the Condensed Consolidated Statements of Operations. |
Schedule of Store Closing Reserves | Store closing reserves of $4.7 million and $7.7 million are included within other current liabilities in the Condensed Consolidated Balance Sheets at February 3, 2018 and January 28, 2017, respectively. Changes in the store closing reserves are as follows: Thousands Total Balance at January 30, 2016 $ — Store closing costs 9,877 Payments/utilization (2,218 ) Balance at January 28, 2017 $ 7,659 Store closing costs 9,889 Payments/utilization (12,893 ) Balance at February 3, 2018 $ 4,655 |
Background, and Basis of Pres36
Background, and Basis of Presentation and Significant Accounting Policies (Narrative) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2018USD ($)storestate | Oct. 28, 2017USD ($) | Jul. 29, 2017USD ($) | Apr. 29, 2017USD ($) | Jan. 28, 2017USD ($) | Oct. 29, 2016USD ($) | Jul. 30, 2016USD ($) | Apr. 30, 2016USD ($) | Feb. 03, 2018USD ($)storesegmentlocationstate | Jan. 28, 2017USD ($)location | Jan. 30, 2016USD ($) | |
Background | |||||||||||
Number of stores | store | 900 | 900 | |||||||||
Number of states in which the Company operates | state | 50 | 50 | |||||||||
Basis of Presentation | |||||||||||
Number of operating segments | segment | 2 | ||||||||||
Intangible Assets | |||||||||||
Number of franchised locations repurchased | location | 32 | 24 | |||||||||
Impairment of Long-Lived Assets and Costs Associated with Exit Activities | |||||||||||
Impairment of property and equipment | $ 3,357 | $ 0 | $ 0 | $ 0 | $ 9,356 | $ 0 | $ 0 | $ 0 | $ 3,357 | $ 9,356 | $ 3,984 |
Store closing accrual | 4,655 | 7,659 | 4,655 | 7,659 | 0 | ||||||
Insurance Programs | |||||||||||
Insurance expense | 5,300 | 5,400 | 4,100 | ||||||||
Reserve for Sales Returns and Allowances | |||||||||||
Reserve for returns and allowances | 1,100 | 1,100 | |||||||||
Dealer and Franchise Commissions | |||||||||||
Commission costs | 171,700 | 209,500 | 278,100 | ||||||||
Advertising Costs | |||||||||||
Advertising costs | 48,200 | 65,200 | 70,500 | ||||||||
Income Taxes | |||||||||||
Valuation allowance | 92,362 | 100,906 | $ 92,362 | 100,906 | |||||||
Franchise Rights [Member] | |||||||||||
Intangible Assets | |||||||||||
Remaining weighted-average amortization period | 3 months 18 days | ||||||||||
Amortization of intangible assets | $ 1,300 | 2,800 | 1,700 | ||||||||
Amortization expense in 2018 | 300 | 300 | |||||||||
Franchise Receivable [Member] | |||||||||||
Allowance for Doubtful Accounts Receivable | |||||||||||
Provision for losses on franchisee receivables | 5,775 | $ 8,242 | 5,775 | $ 8,242 | $ 12,141 | ||||||
Lease costs [Member] | |||||||||||
Impairment of Long-Lived Assets and Costs Associated with Exit Activities | |||||||||||
Store closing accrual | $ 4,700 | $ 4,700 |
Background, and Basis of Pres37
Background, and Basis of Presentation and Significant Accounting Policies (Property and Equipment) (Details) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2018USD ($)property | Jan. 28, 2017USD ($) | Jan. 30, 2016USD ($) | |
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | $ 75,385 | $ 81,161 | |
Less: accumulated depreciation | (39,336) | (40,226) | |
Total property and equipment, net | 36,049 | 40,935 | |
Depreciation | $ 11,800 | 10,600 | $ 8,800 |
Number of properties held for sale | property | 1 | ||
Carrying value of properties held for sale | $ 1,500 | ||
Land [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | 1,741 | 1,741 | |
Buildings and Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | 35,065 | 41,071 | |
Furniture, Fixtures and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | 37,303 | 37,174 | |
Capital Leases [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | $ 1,276 | $ 1,175 | |
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 Pres38
Background, and Basis of Presentation and Significant Accounting Policies (Intangible Assets) (Details) - Franchise Rights [Member] - USD ($) $ in Thousands | Feb. 03, 2018 | Jan. 28, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Reacquisition rights | $ 6,100 | $ 6,100 |
Less: accumulated amortization | (5,845) | (4,573) |
Total intangible assets, net | $ 255 | $ 1,527 |
Background, and Basis of Pres39
Background, and Basis of Presentation and Significant Accounting Policies (Leases) (Details) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2018USD ($)location | Jan. 28, 2017USD ($) | Jan. 30, 2016USD ($) | |
Rent Expense | |||
Minimum rentals | $ 59,533 | $ 69,111 | $ 63,336 |
Less-Sublease rentals | (7,399) | (13,181) | (25,505) |
Total | 52,134 | 55,930 | 37,831 |
Capital Leases | |||
2,018 | 267 | ||
2,019 | 308 | ||
2,020 | 17 | ||
2,021 | 11 | ||
2,022 | 10 | ||
Thereafter | 0 | ||
Total Minimum Lease Payments | 613 | ||
Less - Sublease Income on Leased Properties | 0 | ||
Capital lease obligations | 613 | ||
Less Current Portion of Capital Lease Obligations | (267) | ||
Long-term Capital Lease Obligations | 346 | ||
Operating Leases | |||
2,018 | 44,076 | ||
2,019 | 32,697 | ||
2,020 | 27,422 | ||
2,021 | 20,917 | ||
2,022 | 14,264 | ||
Thereafter | 8,821 | ||
Total Minimum Lease Payments | 148,197 | ||
Less - Sublease Income on Leased Properties | (7,308) | ||
Net Minimum Lease Payments | $ 140,889 | ||
Sears Holdings Corporation [Member] | |||
Related Party Transaction [Line Items] | |||
Number of sublease locations | location | 26 | ||
Sears Holdings Corporation [Member] | Rent Expense [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses paid to Sears Holdings | $ 10,800 | 17,000 | 19,300 |
Seritage Growth Properties [Member] | Sears Holdings Corporation [Member] | |||
Related Party Transaction [Line Items] | |||
Payments for Rent | $ 1,100 | $ 1,000 | $ 500 |
Background, and Basis of Pres40
Background, and Basis of Presentation and Significant Accounting Policies (New Accounting Pronouncements) (Details) - Forecast [Member] - ASU 2014-09 [Member] $ in Millions | Feb. 04, 2018USD ($) |
Minimum [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Right of return asset | $ 1 |
Maximum [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Right of return asset | $ 1.5 |
Accounts and Franchisee Recei41
Accounts and Franchisee Receivables and Other Assets (Details) - USD ($) $ in Thousands | Feb. 03, 2018 | Jan. 28, 2017 |
Receivables [Abstract] | ||
Short-term franchisee receivables | $ 1,205 | $ 1,920 |
Miscellaneous receivables | 14,314 | 10,475 |
Long-term franchisee receivables | 7,962 | 18,406 |
Other assets | 5,106 | 7,643 |
Allowance for losses on short-term franchisee receivables | (847) | (947) |
Allowance for losses on long-term franchisee receivables | (4,928) | (7,295) |
Total Accounts and franchisee receivables and other assets | $ 22,812 | $ 30,202 |
Allowance for Losses on Franc42
Allowance for Losses on Franchisee Receivables (Details) - Franchise Receivable [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 03, 2018 | Jan. 28, 2017 | |
Provision for Losses on Franchisee Receivables [Roll Forward] | ||
Allowance for losses on franchisee receivables, beginning of period | $ 8,242 | $ 12,141 |
Expense (benefit) during the period | 7,361 | (791) |
Write off of franchisee receivables | (9,828) | (3,383) |
Other | 0 | 275 |
Allowance for losses on franchisee receivables, end of period | $ 5,775 | $ 8,242 |
Other Current and Long-Term L43
Other Current and Long-Term Liabilities (Details) - USD ($) $ in Thousands | Feb. 03, 2018 | Jan. 28, 2017 |
Payables and Accruals [Abstract] | ||
Customer deposits | $ 16,655 | $ 19,943 |
Sales and other taxes | 9,221 | 11,380 |
Accrued expenses | 17,755 | 27,602 |
Payroll and related items | 7,140 | 5,766 |
Store closing and severance costs | 4,655 | 7,659 |
Total Other current and long-term liabilities | $ 55,426 | $ 72,350 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Operating Loss Carryforwards [Line Items] | |||
Blended corporate tax rate | 33.70% | 35.00% | 35.00% |
Discrete net tax benefit | $ 759 | ||
Reduction in DTAs and DTLs | 35,200 | ||
AMT deferred tax assets | 800 | ||
Increase (decrease) in valuation allowance | (8,500) | ||
Valuation allowance | 92,362 | $ 100,906 | |
Federal and state net operating loss deferred tax asset | 54,580 | 39,169 | |
Credit carryforward | 3,400 | ||
Foreign Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance | 700 | $ 100 | |
Domestic Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Federal and state net operating loss deferred tax asset | 210,700 | 99,400 | |
State and Local Jurisdiction [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Federal and state net operating loss deferred tax asset | $ 13,100 | $ 6,800 |
Income Taxes (Provisions for In
Income Taxes (Provisions for Income Tax Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2018 | Oct. 28, 2017 | Jul. 29, 2017 | Apr. 29, 2017 | Jan. 28, 2017 | Oct. 29, 2016 | Jul. 30, 2016 | Apr. 30, 2016 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Loss before income taxes: | |||||||||||
U.S. | $ (96,166) | $ (51,588) | $ (41,643) | ||||||||
Foreign | 1,613 | 1,160 | (770) | ||||||||
Loss before income taxes | $ (33,374) | $ (11,370) | $ (29,207) | $ (20,602) | $ (44,961) | $ (17,580) | $ 17,540 | $ (5,427) | (94,553) | (50,428) | (42,413) |
Current: | |||||||||||
Federal | 2 | (155) | (9,758) | ||||||||
State | 215 | 1,001 | 605 | ||||||||
Foreign | 1,046 | 542 | 432 | ||||||||
Total | 1,263 | 1,388 | (8,721) | ||||||||
Deferred: | |||||||||||
Federal | (759) | 67,463 | (4,666) | ||||||||
State | 0 | 12,640 | (1,765) | ||||||||
Total | (759) | 80,103 | (6,431) | ||||||||
Income tax expense (benefit) | $ (130) | $ (437) | $ 239 | $ 832 | $ 833 | $ 75,617 | $ 6,898 | $ (1,857) | $ 504 | $ 81,491 | $ (15,152) |
Income Taxes (Income Tax Rate R
Income Taxes (Income Tax Rate Reconciliation) (Details) | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Income Tax Disclosure [Abstract] | |||
Federal tax rate | 33.70% | 35.00% | 35.00% |
State income tax (net of federal benefit) | (0.20%) | 1.70% | 1.80% |
Federal tax rate change | (37.20%) | 0.00% | 0.00% |
Valuation allowance | 4.40% | (198.50%) | (1.60%) |
Foreign taxes | (1.10%) | 0.00% | 0.50% |
Other | (0.10%) | 0.20% | 0.00% |
Effective tax rate | (0.50%) | (161.60%) | 35.70% |
Income Taxes (Deferred Tax Asse
Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Feb. 03, 2018 | Jan. 28, 2017 |
Deferred tax assets | ||
Bad debts | $ 1,543 | $ 3,487 |
Deferred compensation | 756 | 468 |
Inventory | 0 | 3,159 |
Net operating loss | 54,580 | 39,169 |
Property | 2,598 | 296 |
Royalty-free license | 26,451 | 44,280 |
Other | 7,803 | 11,230 |
Sub-total deferred tax assets | 93,731 | 102,089 |
Valuation allowance | (92,362) | (100,906) |
Total deferred tax assets | 1,369 | 1,183 |
Deferred tax liabilities | ||
Property | (730) | 0 |
Other | (639) | (1,183) |
Total deferred tax liabilities | (1,369) | (1,183) |
Net deferred tax assets | $ 0 | $ 0 |
Related Party Agreements and 48
Related Party Agreements and Transactions (Details) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2018USD ($)storepropertyrenewal | Jan. 28, 2017USD ($) | Jan. 30, 2016USD ($) | |
Related Party Transactions and Concentration of Risk [Line Items] | |||
Number of properties leased | store | 900 | ||
ESL [Member] | |||
Related Party Transactions and Concentration of Risk [Line Items] | |||
Beneficial interest acquired by related party, percentage (more than 50%) | 58.80% | ||
Affiliated Entity | |||
Related Party Transactions and Concentration of Risk [Line Items] | |||
Net Commissions from Sears Holdings | $ 66,557 | $ 82,447 | $ 91,291 |
Purchases related to cost of sales and occupancy | 958,560 | 1,153,739 | 1,386,414 |
Services included in selling and administrative | $ 60,822 | 77,134 | $ 88,486 |
Invoice payment term | 10 days | ||
Financial benefit | $ 4,200 | $ 4,400 | |
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 | 78.00% | 80.00% | 82.00% |
Sears Holdings [Member] | ESL [Member] | |||
Related Party Transactions and Concentration of Risk [Line Items] | |||
Beneficial interest acquired by related party, percentage (more than 50%) | 50.00% | ||
Seritage Growth Properties [Member] | Affiliated Entity | |||
Related Party Transactions and Concentration of Risk [Line Items] | |||
Payments for Rent | $ 1,100 | $ 1,000 | $ 500 |
Number of properties leased | property | 3 | ||
Merchandising Agreement [Member] | Affiliated Entity | |||
Related Party Transactions and Concentration of Risk [Line Items] | |||
Number of renewal terms | renewal | 1 | ||
Length of renewal terms | 3 years | ||
Minimum [Member] | Affiliated Entity | |||
Related Party Transactions and Concentration of Risk [Line Items] | |||
Invoice payment term | 2 days | ||
Minimum [Member] | Payments for Merchandise Inventory to Related Party [Member] | Affiliated Entity | |||
Related Party Transactions and Concentration of Risk [Line Items] | |||
Early payment discount percentage | 0.37% | ||
Maximum [Member] | Affiliated Entity | |||
Related Party Transactions and Concentration of Risk [Line Items] | |||
Invoice payment term | 3 days | ||
Maximum [Member] | Payments for Merchandise Inventory to Related Party [Member] | Affiliated Entity | |||
Related Party Transactions and Concentration of Risk [Line Items] | |||
Early payment discount percentage | 0.43% |
Financing Arrangements (Details
Financing Arrangements (Details) | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2012USD ($) | Feb. 03, 2018USD ($) | Jan. 28, 2017USD ($) | Nov. 01, 2016USD ($) | |
Debt Instrument [Line Items] | ||||
Increases in aggregate principal | $ 100,000,000 | |||
Amount outstanding | 137,900,000 | |||
Senior ABL Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate maximum borrowings | $ 250,000,000 | $ 250,000,000 | ||
Increases in aggregate principal | $ 100,000,000 | |||
Remaining borrowing capacity | $ 24,900,000 | |||
Covenant, fixed charge coverage ratio | 1 | |||
Senior ABL Facility Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate maximum borrowings | 170,000,000 | |||
Senior ABL Facility Non-Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate maximum borrowings | $ 80,000,000 | |||
Unamortized debt costs | $ 3,500,000 | $ 5,400,000 | ||
Letter of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Amount outstanding | 75,000,000 | |||
Letter of Credit [Member] | Senior ABL Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Remaining borrowing capacity | 7,200,000 | |||
Swingline Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Amount outstanding | $ 25,000,000 | |||
London Interbank Offered Rate (LIBOR) [Member] | ||||
Debt Instrument [Line Items] | ||||
Effective interest rate percentage | 5.02% | 3.94% | ||
Base Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Effective interest rate percentage | 8.00% | 5.94% | ||
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Senior ABL Facility Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 3.50% | |||
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Senior ABL Facility Non-Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 2.00% | |||
Minimum [Member] | Base Rate [Member] | Senior ABL Facility Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 2.50% | |||
Minimum [Member] | Base Rate [Member] | Senior ABL Facility Non-Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 1.00% | |||
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Senior ABL Facility Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 4.50% | |||
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Senior ABL Facility Non-Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 2.50% | |||
Maximum [Member] | Base Rate [Member] | Senior ABL Facility Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 3.50% | |||
Maximum [Member] | Base Rate [Member] | Senior ABL Facility Non-Extended Commitments [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 1.50% |
Summary of Segment Data (Detail
Summary of Segment Data (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2018 | Oct. 28, 2017 | Jul. 29, 2017 | Apr. 29, 2017 | Jan. 28, 2017 | Oct. 29, 2016 | Jul. 30, 2016 | Apr. 30, 2016 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Segment Reporting Information [Line Items] | |||||||||||
Store closing costs | $ 9,889,000 | $ 9,877,000 | |||||||||
Net sales | $ 395,774,000 | $ 385,959,000 | $ 489,985,000 | $ 448,233,000 | $ 488,892,000 | $ 487,795,000 | $ 556,388,000 | $ 536,981,000 | 1,719,951,000 | 2,070,056,000 | $ 2,287,788,000 |
Cost of sales and occupancy | 320,022,000 | 299,271,000 | 397,637,000 | 354,478,000 | 406,454,000 | 392,562,000 | 441,508,000 | 420,790,000 | 1,371,408,000 | 1,661,314,000 | 1,769,286,000 |
Selling and administrative | 100,377,000 | 93,101,000 | 115,208,000 | 110,881,000 | 112,828,000 | 109,158,000 | 118,808,000 | 117,992,000 | 419,567,000 | 458,786,000 | 546,128,000 |
Impairment of property and equipment | 3,357,000 | 0 | 0 | 0 | 9,356,000 | 0 | 0 | 0 | 3,357,000 | 9,356,000 | 3,984,000 |
Depreciation and amortization | 3,129,000 | 3,002,000 | 4,704,000 | 2,204,000 | 3,720,000 | 3,188,000 | 3,293,000 | 3,257,000 | 13,039,000 | 13,458,000 | 10,562,000 |
Loss (gain) on the sale of assets | 66,000 | 0 | (25,269,000) | 0 | 0 | (25,203,000) | 0 | ||||
Total costs and expenses | 426,885,000 | 395,374,000 | 517,549,000 | 467,563,000 | 532,424,000 | 504,908,000 | 538,340,000 | 542,039,000 | 1,807,371,000 | 2,117,711,000 | 2,329,960,000 |
Operating loss | (31,111,000) | $ (9,415,000) | $ (27,564,000) | $ (19,330,000) | (43,532,000) | $ (17,113,000) | $ 18,048,000 | $ (5,058,000) | (87,420,000) | (47,655,000) | (42,172,000) |
Total assets | 412,688,000 | 468,426,000 | 412,688,000 | 468,426,000 | 633,833,000 | ||||||
Capital expenditures | 9,228,000 | 12,198,000 | 11,430,000 | ||||||||
Appliances [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 1,251,608,000 | 1,481,016,000 | 1,585,258,000 | ||||||||
Lawn and Garden [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 223,395,000 | 267,611,000 | 308,388,000 | ||||||||
Tools and Paint[Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 117,995,000 | 168,376,000 | 201,441,000 | ||||||||
Other [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 126,953,000 | 153,053,000 | 192,701,000 | ||||||||
Sears Hometown [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Initial franchise revenue | 0 | 0 | (100,000) | ||||||||
Loss on franchisee notes receivable and IT transformation costs | 22,600,000 | 9,200,000 | 20,100,000 | ||||||||
Net sales | 1,177,222,000 | 1,439,563,000 | 1,630,276,000 | ||||||||
Cost of sales and occupancy | 931,078,000 | 1,145,678,000 | 1,262,215,000 | ||||||||
Selling and administrative | 283,294,000 | 318,589,000 | 378,141,000 | ||||||||
Impairment of property and equipment | 2,581,000 | 4,536,000 | 1,983,000 | ||||||||
Depreciation and amortization | 5,378,000 | 6,032,000 | 3,585,000 | ||||||||
Loss (gain) on the sale of assets | 69,000 | ||||||||||
Total costs and expenses | 1,222,331,000 | 1,474,904,000 | 1,645,924,000 | ||||||||
Operating loss | (45,109,000) | (35,341,000) | (15,648,000) | ||||||||
Total assets | 281,805,000 | 303,166,000 | 281,805,000 | 303,166,000 | 421,615,000 | ||||||
Capital expenditures | 4,156,000 | 7,377,000 | 4,563,000 | ||||||||
Sears Hometown [Member] | Appliances [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 805,490,000 | 963,391,000 | 1,056,175,000 | ||||||||
Sears Hometown [Member] | Lawn and Garden [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 204,371,000 | 247,157,000 | 286,222,000 | ||||||||
Sears Hometown [Member] | Tools and Paint[Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 103,706,000 | 150,520,000 | 183,591,000 | ||||||||
Sears Hometown [Member] | Other [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 63,655,000 | 78,495,000 | 104,288,000 | ||||||||
Sears Outlet [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Initial franchise revenue | 0 | (200,000) | 400,000 | ||||||||
Loss on franchisee notes receivable and IT transformation costs | 19,100,000 | 5,000,000 | 16,200,000 | ||||||||
Net sales | 542,729,000 | 630,493,000 | 657,512,000 | ||||||||
Cost of sales and occupancy | 440,330,000 | 515,636,000 | 507,071,000 | ||||||||
Selling and administrative | 136,273,000 | 140,197,000 | 167,987,000 | ||||||||
Impairment of property and equipment | 776,000 | 4,820,000 | 2,001,000 | ||||||||
Depreciation and amortization | 7,661,000 | 7,426,000 | 6,977,000 | ||||||||
Loss (gain) on the sale of assets | (25,272,000) | ||||||||||
Total costs and expenses | 585,040,000 | 642,807,000 | 684,036,000 | ||||||||
Operating loss | (42,311,000) | (12,314,000) | (26,524,000) | ||||||||
Total assets | $ 130,883,000 | $ 165,260,000 | 130,883,000 | 165,260,000 | 212,218,000 | ||||||
Capital expenditures | 5,072,000 | 4,821,000 | 6,867,000 | ||||||||
Sears Outlet [Member] | Appliances [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 446,118,000 | 517,625,000 | 529,083,000 | ||||||||
Sears Outlet [Member] | Lawn and Garden [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 19,024,000 | 20,454,000 | 22,166,000 | ||||||||
Sears Outlet [Member] | Tools and Paint[Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 14,289,000 | 17,856,000 | 17,850,000 | ||||||||
Sears Outlet [Member] | Other [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 63,298,000 | 74,558,000 | $ 88,413,000 | ||||||||
Store closing costs | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Store closing costs | 14,400,000 | 17,100,000 | |||||||||
Store closing costs | Sears Hometown [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Store closing costs | 6,700,000 | 16,000,000 | |||||||||
Store closing costs | Sears Outlet [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Store closing costs | $ 7,700,000 | $ 1,100,000 |
Quarterly Financial Data (Una51
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2018 | Oct. 28, 2017 | Jul. 29, 2017 | Apr. 29, 2017 | Jan. 28, 2017 | Oct. 29, 2016 | Jul. 30, 2016 | Apr. 30, 2016 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
NET SALES | $ 395,774 | $ 385,959 | $ 489,985 | $ 448,233 | $ 488,892 | $ 487,795 | $ 556,388 | $ 536,981 | $ 1,719,951 | $ 2,070,056 | $ 2,287,788 |
COSTS AND EXPENSES | |||||||||||
Cost of sales and occupancy | 320,022 | 299,271 | 397,637 | 354,478 | 406,454 | 392,562 | 441,508 | 420,790 | 1,371,408 | 1,661,314 | 1,769,286 |
Selling and administrative | 100,377 | 93,101 | 115,208 | 110,881 | 112,828 | 109,158 | 118,808 | 117,992 | 419,567 | 458,786 | 546,128 |
Impairment of property and equipment | 3,357 | 0 | 0 | 0 | 9,356 | 0 | 0 | 0 | 3,357 | 9,356 | 3,984 |
Depreciation and amortization | 3,129 | 3,002 | 4,704 | 2,204 | 3,720 | 3,188 | 3,293 | 3,257 | 13,039 | 13,458 | 10,562 |
Gain on the sale of assets | 66 | 0 | (25,269) | 0 | 0 | (25,203) | 0 | ||||
Total costs and expenses | 426,885 | 395,374 | 517,549 | 467,563 | 532,424 | 504,908 | 538,340 | 542,039 | 1,807,371 | 2,117,711 | 2,329,960 |
Operating loss | (31,111) | (9,415) | (27,564) | (19,330) | (43,532) | (17,113) | 18,048 | (5,058) | (87,420) | (47,655) | (42,172) |
Interest income (expense) | (2,444) | (2,149) | (1,874) | (1,591) | (1,771) | (840) | (886) | (766) | |||
Other income | 181 | 194 | 231 | 319 | 342 | 373 | 378 | 397 | 925 | 1,490 | 2,585 |
Loss before income taxes | (33,374) | (11,370) | (29,207) | (20,602) | (44,961) | (17,580) | 17,540 | (5,427) | (94,553) | (50,428) | (42,413) |
Income tax (expense) benefit | 130 | 437 | (239) | (832) | (833) | (75,617) | (6,898) | 1,857 | (504) | (81,491) | 15,152 |
NET LOSS | $ (33,244) | $ (10,933) | $ (29,446) | $ (21,434) | $ (45,794) | $ (93,197) | $ 10,642 | $ (3,570) | $ (95,057) | $ (131,919) | $ (27,261) |
Basic, (in usd per share) | $ (1.46) | $ (0.48) | $ (1.30) | $ (0.94) | $ (2.02) | $ (4.11) | $ 0.47 | $ (0.16) | |||
Diluted, (in usd per share) | $ (1.46) | $ (0.48) | $ (1.30) | $ (0.94) | $ (2.02) | $ (4.11) | $ 0.47 | $ (0.16) | |||
Basic weighted average common shares outstanding | 22,702 | 22,702 | 22,702 | 22,702 | 22,691 | 22,702 | 22,696 | 22,666 | 22,702 | 22,691 | 22,666 |
Diluted weighted average common shares outstanding | 22,702 | 22,702 | 22,702 | 22,702 | 22,691 | 22,702 | 22,699 | 22,666 | 22,702 | 22,691 | 22,666 |
Loss per Common Share (Details)
Loss per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2018 | Oct. 28, 2017 | Jul. 29, 2017 | Apr. 29, 2017 | Jan. 28, 2017 | Oct. 29, 2016 | Jul. 30, 2016 | Apr. 30, 2016 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Earnings Per Share [Abstract] | |||||||||||
Basic weighted average shares | 22,702,000 | 22,702,000 | 22,702,000 | 22,702,000 | 22,691,000 | 22,702,000 | 22,696,000 | 22,666,000 | 22,702,000 | 22,691,000 | 22,666,000 |
Dilutive effect of restricted stock (in shares) | 0 | 0 | 0 | ||||||||
Diluted weighted average shares | 22,702,000 | 22,702,000 | 22,702,000 | 22,702,000 | 22,691,000 | 22,702,000 | 22,699,000 | 22,666,000 | 22,702,000 | 22,691,000 | 22,666,000 |
Net loss | $ (33,244) | $ (10,933) | $ (29,446) | $ (21,434) | $ (45,794) | $ (93,197) | $ 10,642 | $ (3,570) | $ (95,057) | $ (131,919) | $ (27,261) |
Loss per common share: | |||||||||||
Basic (usd per share) | $ (4.19) | $ (5.81) | $ (1.20) | ||||||||
Diluted (usd per share) | $ (4.19) | $ (5.81) | $ (1.20) | ||||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 14,000 | 14,000 | 55,958 |
Equity (Narrative) (Details)
Equity (Narrative) (Details) - USD ($) | Apr. 13, 2018 | Jan. 18, 2018 | Jan. 30, 2017 | May 16, 2016 | Feb. 03, 2018 | Apr. 29, 2017 | Aug. 01, 2015 | Aug. 03, 2013 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | Aug. 28, 2013 |
Stock-based Compensation | ||||||||||||
Share-based compensation expense | $ 300,000 | |||||||||||
Unrecognized compensation cost | $ 1,200,000 | $ 1,200,000 | ||||||||||
Unrecognized compensation cost period for recognition | 3 years | |||||||||||
Share Repurchase Program | ||||||||||||
Authorized amount | $ 25,000,000 | |||||||||||
Shares repurchased (in shares) | 0 | 0 | 0 | |||||||||
Remaining authorized repurchase amount | $ 12,500,000 | $ 12,500,000 | ||||||||||
Restricted Stock [Member] | ||||||||||||
Stock-based Compensation | ||||||||||||
Forfeited in period (in shares) | 14,000 | |||||||||||
Equity instruments other than options, vested in period (in shares) | 36,530 | |||||||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||||
Stock-based Compensation | ||||||||||||
Forfeited in period (in shares) | 40,000 | |||||||||||
Equity instruments other than options, vested in period (in shares) | 76,485 | |||||||||||
Equity instruments other than options, nonvested (in shares) | 146,303 | 146,303 | ||||||||||
Share-based compensation expense | $ (100,000) | |||||||||||
Amended and Restated 2012 Stock Plan (the 'Plan') [Member] | ||||||||||||
Stock-based Compensation | ||||||||||||
Shares reserved under plan (in shares) | 4,000,000 | 4,000,000 | ||||||||||
Amended and Restated 2012 Stock Plan (the 'Plan') [Member] | Restricted Stock [Member] | ||||||||||||
Stock-based Compensation | ||||||||||||
Stock granted (in shares) | 14,000 | 89,221 | ||||||||||
Forfeited in period (in shares) | 52,691 | |||||||||||
Amended and Restated 2012 Stock Plan (the 'Plan') [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||||||
Stock-based Compensation | ||||||||||||
Stock granted (in shares) | 361,393 | 262,788 | 159,475 | |||||||||
Forfeited in period (in shares) | 34,091 | |||||||||||
Subsequent Event [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||||||
Stock-based Compensation | ||||||||||||
Equity instruments other than options, vested in period (in shares) | 125,384 | |||||||||||
Share-based Compensation Award, Tranche One [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||||||
Stock-based Compensation | ||||||||||||
Vesting percentage | 33.30% | 50.00% | ||||||||||
Share-based Compensation Award, Tranche Two [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||||||
Stock-based Compensation | ||||||||||||
Vesting percentage | 33.30% | 50.00% | ||||||||||
Share-based Compensation Award, Tranche Three [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||||||
Stock-based Compensation | ||||||||||||
Vesting percentage | 33.30% |
Equity (Restricted Stock Awards
Equity (Restricted Stock Awards) (Details) - Restricted Stock [Member] - $ / shares | May 16, 2016 | Feb. 03, 2018 |
Shares | ||
Vested (in shares) | (36,530) | |
2015 Grant [Member] | ||
Shares | ||
Beginning of year balance (in shares) | 14,000 | |
Granted (in shares) | 0 | |
Vested (in shares) | 0 | |
Forfeited (in shares) | (14,000) | |
Balance at end of period (in shares) | 0 | |
Weighted-Average Fair Value on Date of Grant | ||
Beginning of year balance (in dollars per share) | $ 9.38 | |
Granted (in dollars per share) | 0 | |
Vested (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 9.38 | |
Balance at end of period (in dollars per share) | $ 0 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Retirement Benefits [Abstract] | |||
401(k) Savings Plan | $ 1,056 | $ 957 | $ 905 |
Sale of Assets (Details)
Sale of Assets (Details) - USD ($) $ in Thousands | Jul. 27, 2016 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 |
Other Income and Expenses [Abstract] | ||||
Proceeds from sale of property | $ 26,100 | $ 0 | $ 26,073 | $ 0 |
Gain on sale of assets | $ 25,200 |
Store Closing Charges (Narrativ
Store Closing Charges (Narrative) (Details) - USD ($) $ in Thousands | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 |
Restructuring and Related Activities [Abstract] | |||
Restructuring reserve | $ 4,655 | $ 7,659 | $ 0 |
Store Closing Charges (Schedule
Store Closing Charges (Schedule of Store Closing Costs) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 03, 2018 | Jan. 28, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||
Total Store Closing Costs | $ 9,889 | $ 9,877 |
Facility Closing [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Total Store Closing Costs | 15,395 | 17,666 |
Cost of Sales And Occupancy [Member] | Facility Closing [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Lease termination costs | 9,665 | 8,477 |
Inventory related | 4,527 | 7,224 |
Depreciation and amortization [Member] | Facility Closing [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Accelerated Deprecation | 979 | 565 |
Selling, General and Administrative Expenses [Member] | Facility Closing [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Other charges | $ 224 | $ 1,400 |
Store Closing Charges (Schedu59
Store Closing Charges (Schedule of Store Closing Reserves) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 03, 2018 | Jan. 28, 2017 | |
Restructuring and Related Activities [Abstract] | ||
Balance at January 28, 2017 | $ 7,659 | $ 0 |
Store closing costs | 9,889 | 9,877 |
Payments/utilization | (12,893) | (2,218) |
Balance at February 3, 2018 | $ 4,655 | $ 7,659 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | Feb. 16, 2018USD ($)subsidiary |
Subsequent Event [Line Items] | |
Number of operating subsidiaries | subsidiary | 3 |
Term Loan Agreement [Member] | |
Subsequent Event [Line Items] | |
Aggregate maximum borrowings | $ 40,000,000 |
Debt issuance costs | $ 1,000,000 |
London Interbank Offered Rate (LIBOR) [Member] | Term Loan Agreement [Member] | |
Subsequent Event [Line Items] | |
Variable rate | 8.50% |
Covenant, minimum combined loan cap | 10.00% |
Minimum [Member] | Term Loan Agreement [Member] | |
Subsequent Event [Line Items] | |
Minimum interest rate | 9.50% |