San Jose, Calif.-based Orchard Supply Hardware said sales were down in 2012, but the company pointed to improved “financial flexibility.”
Orchard Supply Hardware Stores (OSH) says it is trying to modify its term loan debt and work to improve its capital structure.
In the meantime, the company’s preliminary tally for sales for the full year and the fourth quarter both slipped, despite carrying an extra week. Preliminary net sales for the fourth quarter ended Feb. 2, 2013 (14 weeks), were $153.4 million compared with net sales of $141.6 million in the fourth quarter of fiscal 2011 (13 weeks). Net sales for fiscal 2012 (53 weeks) were $657.6 million compared with net sales of $660.5 million in fiscal 2011 (52 weeks).
The company expanded its existing Senior Secured Credit Facility with Wells Fargo Capital Finance and Bank of America, N.A., increasing total borrowing capacity to $145.0 million through the addition of a $17.5 million last-in-last-out supplemental term loan tranche.
“We are very pleased to have expanded our credit facility, as planned, and improved our financial flexibility, both of which provide additional liquidity as we enter our peak spring selling season,” said CEO Mark Baker.
A bright spot for the company, he said, are the company’s new-format stores. Sales at these remodeled locations continued to outpace the balance of its stores. While the company continued to experience merchandise margin pressure in the fourth quarter, merchandise margin improved sequentially over the course of the quarter.
“We currently have 10 stores in our more productive neighborhood format and we are pleased with the sales growth we have seen to date at these stores, including results in the fourth quarter, which were improved from earlier in the year,” said CEO Mark Baker. “We look forward to bringing our new format to another 10 stores in fiscal 2013 through remodels and new store openings.”
The company expects to report final fiscal 2012 financial results in late April.
“We have made significant strides in transforming the Orchard brand and our business since December 2011 when we became an independent public company. At the same time, we recognize that we did not achieve all of our objectives of the past year and that we continue to face challenges ahead,” Baker said.