Orchard Supply Hardware got off to a weak start this week as it announced an expected loss of $15.0 to $17.0 million for 2011.
Newly spun off from Sears Holdings Corp., the company began trading as an independent entity on the Nasdaq Stock Exchange on Tuesday with an opening share price of $25.
By the end of trading Thursday, its share prices had slipped below $17.
Most of the anticipated 2011 loss stems from sale-leaseback transactions associated with the transition. Same-store sales for all of 2011 should be down as much as 0.9 percent, but the company expects to report positive same-store sales for the fourth quarter.
“We are pleased with the comp store sales momentum we’re beginning to generate,” CEO Mark Baker said in a statement. “In preparation for the spin-off, we incurred additional costs associated with establishing and expanding our corporate support infrastructure and in strengthening our financial position by renegotiating our financing arrangements and monetizing Company-owned store properties through sale-leaseback transactions. These initiatives have helped us start to lay the foundation to develop and evolve the Orchard brand, but have adversely affected our short-term profitability.”
With 87 full-service hardware stores in California including one in Santa Clarita, the company said it plans to open three new stores and remodel six others.
Baker said he’s focusing on five strategies to drive new business.
“These include projecting a consistent and compelling brand identity, driving sales through new merchandising and marketing initiatives, improving operational efficiency, aligning resources and talent, and continuing to strengthen our financial position,” he said.
“While we have made progress, we believe there is a significant opportunity to deliver long-term growth and create shareholder value as we leverage Orchard’s 80-year brand history and execute on our strategic plan.”
The company was founded in 1931 as a purchasing cooperative in San Jose, where it is still headquartered.