Sears Hometown and Outlet Stores, reported results for the second quarter ended August 1, 2015. Net sales decreased $19.1 million, or 3%, to $619.6 million from Q2 2014.
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During the second quarter of 2015, company's Commission Sales declined to $10.4 million compared to $18.7 million in the second quarter of 2014. As a result, comparable store sales, which measure the increase in sales on transactions fulfilled and recorded by SHO and do not include Commission Sales, were favorably impacted.
Including Commission Sales, Adjusted comparable store sales for the second quarter of 2015 decreased 2.6%. Comparable store sales in Hometown were down 1.1% while comparable store sales in Outlet were down 2.2%. Adjusted comparable store sales were down 2.5% in Hometown and down 2.7% in Outlet.
Gross margin was $141.4 million, or 22.8% of net sales, in the second quarter of 2015 compared to $147.1 million, or 23.0% of net sales, in the second quarter of 2014.
Excluding the impact of online commissions from Sears Holdings and initial franchise revenues, gross margin improved 70 basis points to 22.4% of net sales in the second quarter of 2015 compared to 21.7% of net sales in the second quarter of 2014. Selling and administrative expenses decreased to $136.2 million, or 22% of net sales, in the second quarter of 2015 from $139.2 million, or 21.8% of net sales, in the prior-year quarter.
The company recorded operating income of $3 million and $5.8 million in the second quarters of 2015 and 2014, respectively. The $2.8 million decrease in operating income was primarily driven by lower initial franchise revenues and lower volume, partially offset by lower selling and administrative expenses and a higher gross margin rate (excluding initial franchise revenues)
Excluding initial franchise revenues from both periods, second quarter 2015 operating income would have increased by $2.7 million to $3.1 million compared to $0.4 million in the second quarter of 2014. ■