SEARS HOMETOWN & OUTLET STORES, INC. (Form: 8-K, Received: 07/01/2015 16:47:17)

EXECUTIVE

SEARS HOMETOWN AND OUTLET STORES, INC.

/s/ William A. Powell

/s/ Becky Iliff

William A. Powell

Becky Iliff

Vice President, Human Resources

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 1, 2015

SEARS HOMETOWN AND OUTLET STORES, INC.

(Exact Name of Registrant as Specified in Charter)


Delaware	001-35641	80-0808358
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
5500 Trillium Boulevard, Suite 501 Hoffman Estates, Illinois		60192
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (847) 286-7000

(Former Name or Former Address, if Changed Since Last Report):

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 1, 2015 the Board of Directors of Sears Hometown and Outlet Stores, Inc. (the “Company”) elected William A. Powell as the Company’s Chief Executive Officer and President, effective immediately. Mr. Powell succeeds W. Bruce Johnson, whose employment as the Company’s Chief Executive Officer and President is ending.

Also on July 1, 2015 the Board of Directors elected Mr. Powell as a member of the Board of Directors.

A copy of the Company’s July 1, 2015 news release with respect to Mr. Powell is attached as Exhibit 99.1 to this Form 8-K.

The Company’s letter agreement with Mr. Powell dated July 1, 2015 (the “Letter Agreement”) provides that Mr. Powell will receive an annual base salary of $700,000. He will also receive a payment of $100,000 (gross) to offset expenses incurred by him and expenses incurred by the Company with respect to the sale of his current home in the Cleveland, Ohio area, the purchase of a new home in the Chicago area, house-hunting trips, moving household goods, and brokerage fees, all if he elects to relocate his family to the Chicago area. If he voluntarily terminates his employment prior to the first anniversary of his start date as Chief Executive Officer and President other than for Good Reason or if prior to that date the Company terminates his employment for Cause, he will repay to the Company all of this relocation assistance paid or reimbursed to him and all relocation assistance incurred by the Company. “Good Reason” and “Cause” are defined in the Amended and Restated Executive Severance Agreement that is described below in this Item 5.02.

The Letter Agreement also provides that Mr. Powell is entitled to continue to participate in the Company’s 2015 Annual Incentive Plan (“AIP”) with a target award of 100% of his base salary (which is an increase from his current participation at 75% of his base salary). He is also entitled to continue to participate in the Company’s Long-Term Incentive Program with a target award of 200% of his base salary (which is an increase from his current participation at 100% of his base salary).

The Letter Agreement also provides that Mr. Powell’s current $100,000 cash retention award dated April 21, 2015 will continue in effect in accordance with its current terms and conditions.

Mr. Powell has entered into an Amended and Restated Executive Severance Agreement with the Company dated July 1, 2015 (the “Severance Agreement”). The Severance Agreement provides, among other things, that if Mr. Powell is involuntarily terminated by the Company for any reason other than for Cause, death, or disability, or if he voluntarily terminates his employment for Good Reason, the Company will pay him cash severance equal to (a) one times his annual base salary rate as of the date his employment terminates, plus (b) the amount, if any, determined by the Compensation Committee of the Board of Directors to have been actually earned by Mr. Powell under the AIP for the year in which the termination occurs, prorated to the date of termination, plus (c) if the termination occurs prior to Mr. Powell’s receipt of his actually earned annual bonus under the AIP (as determined by the Compensation Committee) for the year that is prior to the year in which the termination occurs, that bonus to be paid to Mr. Powell at the time when the Company makes payments of bonuses earned with respect to the prior year. The payments described in this paragraph are subject to mitigation. The Severance Agreement also includes non-compete, non-solicitation, and non-disclosure agreements by Mr. Powell.

A copy of the Letter Agreement and a copy of the Severance Agreement are attached to this Form 8-K as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by this reference. The foregoing descriptions of the terms of the Letter Agreement and the Severance Agreement are qualified in their entirety by reference to their full texts.

Item 8.01. Other Events.

The Company’s Board of Directors has elected E.J. Bird, a member of the Board of Directors, as the Chairman of the Board in accordance with Section 2.7 of the Company’s Amended and Restated Bylaws.

Forward-Looking Statements

This Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based upon the current beliefs and expectations of the Company’s management. These forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the Company’s control. Additional information concerning other factors is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015 and subsequent filings with the SEC. The Company intends the forward-looking statements to speak only as of when made and, except as required by law, the Company will not update or revise the forward-looking statements as more information becomes available.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits .

The Exhibits listed in the accompanying “Exhibit Index” have been filed as part of this Form 8-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


SEARS HOMETOWN AND OUTLET STORES, INC.

By:		/s/ CHARLES J. HANSEN
		Charles J. Hansen
		Vice President, General Counsel, and Secretary

Date: July 1, 2015

Exhibit Index


Exhibit Number		Exhibit Description

10.1*		Letter agreement with William A. Powell dated July 1, 2015

10.2*		Amended and Restated Executive Severance Agreement between Sears Hometown and Outlet Stores, Inc. and William A. Powell dated July 1, 2015

99.1*		News release dated July 1, 2015

* Furnished herewith

Exhibit 10.1

Sears Hometown and Outlet Stores, Inc.

5500 Trillium Blvd

Hoffman Estates, IL 60192

July 1, 2015

Mr. William A. Powell

1905 Stormy Court #203

Schaumburg, IL 60193

Dear Will,

On behalf of Sears Hometown and Outlet Stores, Inc. (“ SHO ”), we are pleased to extend to you our offer to serve as the Chief Executive Officer and President of SHO effective as of July 1, 2015 (the “ Effective Date ”). In this position, you will report directly to the Board of Directors of SHO (the “ Board ”). This letter, the terms of which have been mutually agreed upon by you and SHO, will govern the terms of your employment with SHO as of the Effective Date. Subsequent to your acceptance of this offer, you will be nominated as a member of the Board.

The key elements of your employment and compensation package are as follows:

Annual Base Salary : $700,000.

Cash Retention Award : On April 20, 2015 the Compensation Committee of the Board of Directors (the “ Committee ”) approved a cash retention award to you in the amount of $100,000, which is governed by a Cash Retention Agreement dated April 21, 2015. This award will continue in full force and effect.

Annual Incentive Plans : You will continue to be eligible to participate in the Sears Hometown and Outlet Stores, Inc. Annual Incentive Plan (the “ SHO AIP ”) in accordance with, and subject to, its terms, with an annual incentive opportunity of 100% of your base salary. SHO AIP awards are made in the sole discretion of the Committee. Awards earned under the SHO AIP will be paid by April 15th of the fiscal year following the year to which they relate, provided that you are actively employed by SHO as of the payment date except as otherwise provided in your Amended and Restated Executive Severance Agreement referred to below. Further details regarding SHO AIP awards will be provided to you at the time of grant.

Long-Term Incentive Plans : You will continue to be eligible to participate in the Sears Hometown and Outlet Stores, Inc. Long-Term Incentive Program (the “ SHO LTIP ”) in accordance with, and subject to, its terms, with an incentive opportunity of 200% of your base salary. SHO LTIP awards are made in the sole discretion of the Committee. You must be employed with SHO as of the grant date of any awards earned under the SHO LTIP in order to receive such awards. Further details regarding SHO LTIP awards will be provided to you at the time of grant.

Executive Severance Agreement : Your Executive Severance Agreement with Sears Holding Corporation (“ SHC ”), dated November 7, 2007 and assigned to SHO in connection with its separation from SHC, has been amended and restated in the form mutually agreed upon by you and SHO and is in the form attached to this letter (the “ Amended and Restated Executive Severance Agreement ”). You acknowledge that, as a condition of your employment as SHO’s Chief Executive Officer and President, you will execute and deliver to SHO prior to the commencement of such employment the Amended and Restated Executive Severance Agreement.

Paid Time Off : Each year, you will receive four (4) weeks of paid vacation, six (6) paid national holidays and four (4) paid personal days.

Benefits : You will be eligible to participate in all retirement, health and welfare programs made available or sponsored by SHO on a basis no less favorable than other SHO executive officers, in accordance with the applicable terms, conditions, and availability of those programs.

Moving Allowance : If you elect to move your family from the Cleveland, Ohio area to the Chicago, Illinois area, SHO will provide up to $100,000 to be used in connection with the sale of your current family home in the Cleveland, Ohio area, the purchase of a new family home in the Chicago, Illinois area, house-hunting trips, moving household goods, and brokerage fees. We will work with you and a third-party relocation-services provider to be selected by SHO to implement commercially reasonable arrangements for relocation assistance that will take in account your circumstances. Further details regarding relocation assistance will be provided to you. If either (a) you voluntarily terminate your employment prior to the first anniversary of the Effective Date other than for Good Reason (as defined in the Amended and Restated Executive Severance Agreement) or (b) prior to the first anniversary of the Effective Date SHO terminates your employment for Cause (as defined in the Amended and Restated Executive Severance Agreement), then you will repay to SHO all relocation assistance paid or reimbursed to you, or paid directly to vendors by SHO, no later than the 30th day following your last day of work. Your repayment obligation will include all taxes withheld for such amounts except to the extent prohibited by law or that SHO administratively recovers taxes withheld, including via reimbursement or credit for SHO’s benefit, from the applicable government authority.

Please note that this offer letter is subject to the approval of SHO’s Board, which will be sought by SHO management on or before July 1, 2015. SHO is required by the rules of the U.S. Securities and Exchange Commission (the “ SEC ”) to make public disclosures regarding your employment by SHO and the terms and conditions of this offer letter if it is executed by SHO and by you, and to thereafter file this offer letter as an exhibit to appropriate SEC reports that will be publicly available. The laws of the State of Illinois (without regard to its conflicts-of-law principles) govern this offer letter.

Will, we are excited about the important contributions that you will make to SHO in the role of Chief Executive Officer and President, and look forward to your acceptance of this offer.

This offer will expire if not accepted within one week of the date of this letter.

Sincerely,

Sears Hometown and Outlet Stores, Inc.

/s/ E.J. Bird

E.J. Bird

Chairman of the Board

Accepted:

/s/ William A. Powell

William A. Powell

July 1, 2015

Date

Exhibit 10.2

Amended and Restated Executive Severance Agreement

July 1, 2015

This Amended and Restated Executive Severance Agreement (this “ Agreement ”) is between Sears Hometown and Outlet Stores, Inc. (together with its subsidiaries “ SHO ”) and William A. Powell (“ Executive ”).

Preliminary Statement

Executive and Sears Holdings Corporation (“SHC”) entered into an Executive Severance Agreement dated November 7, 2007, which agreement (the “ Original Agreement ”) was assigned by SHC to SHO as part of its separation from SHC. In connection with Executive’s commencement of employment as the Chief Executive Officer and President of SHO, Executive and SHO have determined that it is desirable to amend and restate the Original Agreement.

Terms and Conditions

Executive and SHO, intending to be legally bound and for good and valuable consideration, agree as follows:

Benefits Upon Termination of Employment .

Severance Benefits . If Executive is involuntarily terminated without Cause or Executive voluntarily terminates Executive’s employment for Good Reason (as such terms are defined in Section 2 below), Executive will be entitled to the benefits described in Sections 1(a)(i), (ii) and (iii) below (collectively, the “ Severance Benefits ”). Executive will not be entitled to the Severance Benefits if Executive’s employment terminates for any other reason, including for Cause or due to death or Disability (as defined in Section 2 below). Executive will not be entitled to Severance Benefits if Executive does not meet all of the other requirements of this Agreement, including those of Section 4(g).

Continuation of Salary and Receipt of Bonus.

SHO will pay Executive cash severance in an amount equal to one times Executive’s annual base salary rate as of the date on which Executive’s employment terminates (the “ Date of Termination ”). Subject to Section 1(a)(i)(6) below, payment of the amount determined in accordance with this Section 1(a)(i)(1) (the “ Salary Continuation ”) will commence on Executive’s Separation from Service (as defined in Section 2 below) and will be paid in substantially equal installments on each regular salary payroll date for a period of twelve (12) months following the Date of Termination (the “ Salary Continuation Period ”), except as otherwise provided in this Agreement.

Executive will also receive a lump sum equal to the bonus that he actually earned as determined by the Compensation Committee of the Board of Directors in accordance with SHO’s Annual Incentive Plan (the “ AIP ”) for the fiscal year in which the Date of Termination occurs, pro-rated through the Date of Termination (the “ Bonus Payment ”). The Bonus Payment will be made at the time when SHO makes payments of bonuses earned under the AIP for the fiscal year of Executive’s termination to active employees of SHO, subject to Section 1(a)(i)(6) below.

If the Date of Termination occurs prior to receipt of his earned annual bonus under the AIP (as determined by the Compensation Committee of the Board of Directors) for the fiscal year prior to the fiscal year in which the Date of Termination occurs, Executive will also receive the full amount of such prior year’s bonus (the “ Prior Year Bonus ”). The Prior Year Bonus will be paid at the time when SHO makes payments of bonuses earned under the AIP for the fiscal year prior to the year of Executive’s termination to active employees of SHO, subject to Section 1(a)(i)(6) below.

Notwithstanding the foregoing, to the extent Executive’s termination is as a result of an event that would trigger payments under a then-current and applicable transition pay or severance plan or program (the “ Other Severance Program ”) under which Executive would have been eligible for severance pay and benefits for a period longer than twelve (12) months, and provided the severance pay under the Other Severance Program is greater than the sum of the Salary Continuation, the Bonus Payment, and the Prior Year Bonus, then the Salary Continuation and Salary Continuation Period for purposes of this Agreement will be that greater amount and longer period provided by the Other Severance Program, except as otherwise provided in this Agreement.

Further and notwithstanding the foregoing, the SHO obligations that may become due under this Section 1(a)(i) will be reduced on a dollar-for-dollar basis (but not below zero), by the amount, if any, of salary or wages that Executive earns from a subsequent employer (including those arising from self-employment) during the Salary Continuation Period other than all approved external director fees that Executive earns or is otherwise entitled to receive. For avoidance of doubt, Executive will not be obligated to seek affirmatively or accept an employment, contractor, consulting or other arrangement in order to mitigate the Salary Continuation, Bonus Payment, and Prior Year Bonus. Further, to the extent Executive does not execute and timely submit the General Release and Waiver (in accordance with Section 4(g) below) by the deadline specified therein, Salary Continuation payments will terminate, and any entitlement to future Salary Continuation payments, the Bonus Payment, and the Prior Year Bonus will be forfeited, and Executive will be required to reimburse SHO for any portion of the Salary Continuation, the Bonus Payment, and the Prior Year Bonus already paid to him.

Notwithstanding anything in this Section 1(a)(i) to the contrary, if the Salary Continuation, Bonus Payment and Prior Year Bonus payable to Executive in accordance with Section 1(a)(i) during the six (6) months after Executive’s Separation from Service would exceed the Section 409A Threshold and if as of the date of the Separation from Service Executive is a Specified Employee (as such terms are defined in Section 2

below), then payment will be made to Executive on each regular salary payroll date during the first six (6) months of the Salary Continuation Period until the aggregate amount received equals the Section 409A Threshold. Any portion of the Salary Continuation, Bonus Payment, and Prior Year Bonus that is in excess of the Section 409A Threshold and that would otherwise be paid during such six (6) months will instead be paid to Executive in a lump sum payment on the date that is six (6) months and one (1) day after the date of Executive’s Separation from Service.

All Salary Continuation payments (described under this Section 1(a)(i)) will terminate, and any entitlements to future Salary Continuation, Bonus Payment and Prior Year Bonus will be forfeited if Executive is employed by a SHO Competitor or SHO Vendor (as such terms are defined in Sections 4(c)(ii) and 4(d)(ii) herein, respectively) during the Salary Continuation Period (which for purposes of this Section 1(a)(i)(3) will not exceed twelve (12) months), or in the event of Executive’s breach of this Agreement (in accordance with Section 10 below). In either case, Executive will be required to reimburse SHO for any portion of the Salary Continuation, Bonus Payment and Prior Year Bonus already paid to him.

ii.

Continuation of Benefits.

During the Salary Continuation Period, Executive will be entitled to participate in all benefit plans and programs (except as specified in this Section 1(a)(ii)) in which Executive was eligible to participate immediately prior to the Date of Termination (subject to the terms and conditions and continued availability and applicability of such plans and programs); provided, however, that Executive will not be eligible to participate in the long-term disability plan, health care flexible spending account (except on an after-tax basis and only through the earlier of the end of Salary Continuation Period or the calendar year in which the Separation from Service occurs), SHO paid life insurance, and any 40l(k) savings plan maintained by SHO (or any other defined contribution plan sponsored by SHO). SHO’s current medical and dental plans provide COBRA-only coverage for former employees who are not active employees of the Company. If at the Date of Termination COBRA coverage is the only coverage available under SHO’s then-current medical and dental plans, Executive and Executive’s eligible dependents will be eligible during the Salary Continuation Period for COBRA coverage under the then-current plans, with Executive’s percentage share of the cost of COBRA premiums to be the same as the percentage share that Executive paid for medical and dental plan coverage immediately prior to the Date of Termination.

If Executive does not timely execute and submit the General Release and Waiver (in accordance with Section 4(g) herein) by the deadline specified therein, Executive will be required to reimburse SHO for the portion of the cost for the benefits referred to under Section 1(a)(ii)(l) immediately above paid by SHO during the Salary Continuation Period,

and Executive will instead be eligible for COBRA coverage under the SHO medical and dental plans as of the Date of Termination. Executive will be responsible for the full cost of COBRA premiums if this Section 1(a)(ii)(2) is applicable.

Subject to Section 1(a)(ii)(4) immediately below, in the event Executive provides services to another employer and is covered by such employer’s health benefits plan or program, the medical and dental benefits provided by SHO hereunder will be secondary to such employer’s health benefits plan or program in accordance with the terms of the SHO health benefit plans.

All of the benefits described in this Section 1(a)(ii) will terminate, and any entitlements to future such payments will be forfeited, if Executive is employed by a SHO Competitor or a SHO Vendor during the Salary Continuation Period (which for purposes of this Section 1(a)(ii)(4) will not exceed twelve (12) months) or in the event of Executive’s breach of this Agreement (in accordance with Section 10 below). In either case, Executive will be required to reimburse SHO for any portion of the cost for the benefits referred to under Section 1(a)(ii)(1) immediately above paid by SHO during the Salary Continuation Period, and Executive will instead be eligible for COBRA continuation coverage under the SHO medical and dental plans as of Executive’s Severance from Service date. Executive will be responsible for the full cost of COBRA premiums if this Section 1(a)(ii)(4) is applicable.

iii.

Outplacement . As of Executive’s Separation from Service, Executive will be immediately eligible for reasonable outplacement services at the expense of SHO. SHO and Executive will mutually agree on which outplacement firm, among current vendors used by SHO will provide these services. Such services will be provided for up to six (6) months from the Separation from Service or until employment is obtained, whichever occurs first. Outplacement benefits described in this Section 1(a)(iii) will terminate and forever lapse if Executive is employed by a SHO Competitor or SHO Vendor or in the event of Executive’s breach of this Agreement (in accordance with Section 10 below).

iv.

Other . In addition to the foregoing Severance Benefits, a lump sum payment will be made to Executive within ten (10) business days following the Date of Termination in an amount equal to the sum of any base salary and any vacation benefits that have accrued through the Date of Termination but only to the extent not already paid. No vacation will accrue during the Salary Continuation Period. Notwithstanding the foregoing and anything herein to the contrary, in the event of Executive’s death during the Salary Continuation Period, any unpaid portion of the Salary Continuation payable in accordance with Section 1(a)(i) above will be paid in a lump sum, within sixty (60) days of death (and no later than amounts would have been paid absent death), to Executive’s estate, and any eligible dependents who are covered dependents as of the date of death will experience a qualifying event under COBRA as a result of such death.

Impact of Termination on Certain Other Plans/Programs .

Annual Incentive Plan . Subject to Section 1(a)(i) of this Agreement, upon the Date of Termination, Executive’s entitlement to any award under the AIP or other applicable annual incentive plan sponsored by SHO will be determined in accordance with the terms and conditions of the AIP or other plan document regarding termination of employment.

Long-Term Incentive Program . Upon the Date of Termination, Executive’s entitlement to any award granted to Executive under SHO’s Long-Term Incentive Program (the “ LTIP ”) or other applicable long-term incentive program sponsored by SHO will be determined in accordance with the terms and conditions of the applicable award letter and the LTIP or other plan document regarding termination of employment.

Stock Plan . Upon the Date of Termination, Executive’s entitlement to any unvested options, restricted stock, or other equity award granted to Executive under SHO’s 2012 Amended and Restated Stock Plan or other stock plan sponsored by SHO will be determined in accordance with the terms and conditions of the applicable award agreement and the stock plan document regarding termination of employment.

vi.

Post-Termination Forfeiture of Severance Benefits . If SHO determines after the Date of Termination that Executive engaged in activity during employment with SHO that SHO determines constituted Cause, Executive will immediately cease to be eligible for Severance Benefits and will be required to reimburse SHO for any portion of Severance Benefits received by Executive during the Salary Continuation Period.

Definitions . For purposes of this Agreement, each capitalized term herein is either defined in the section, exhibit, or Appendix in which it first appears or in this Section 2. The following capitalized terms will have the definitions as set forth below:

“ Cause ” will mean (i) a material breach by Executive (other than a breach resulting from Executive’s incapacity due to a Disability) of Executive’s duties and responsibilities to SHO, including under Executive’s Offer Letter with SHO dated July 1, 2015 (the “ Offer Letter ”), which breach is demonstrably willful and deliberate on Executive’s part, is committed in bad faith or without reasonable belief that such breach is in the best interests of SHO, and is not remedied in a reasonable period of time after receipt of written notice from SHO specifying such breach; (ii) Executive’s conviction of a felony involving moral turpitude; or (iii) Executive’s dishonesty or willful misconduct in connection with Executive’s employment.

“ Disability ” will mean disability as defined under the SHO long-term disability plan in effect as of the date of execution of this Agreement (regardless of whether Executive is a participant under such plan).

“ Good Reason ” will mean, without Executive’s written consent, (i) a reduction of more than ten percent (10%) in the sum of Executive’s annual base salary and target

annual incentive under the AIP from those in effect as of the date of this Agreement; (ii) Executive’s mandatory relocation to an office more than fifty (50) miles from the primary location at which Executive is required to perform Executive’s duties immediately prior to the date of this Agreement; or (iii) any other action or inaction that constitutes a material breach of the terms of Executive’s employment with SHO, including under the Offer Letter, by SHO or its successor, including failure of a successor company to assume or fulfill the obligations under this Agreement. In each case, Executive must provide SHO with written notice of the facts giving rise to a claim that Good Reason exists for purposes of this Agreement within thirty (30) days of the initial existence of such Good Reason event, and SHO will have a right to remedy such event within sixty (60) days after receipt of Executive’s written notice (the “ Sixty (60)-Day Period ”). If SHO remedies the Good Reason event within the Sixty (60)-Day Period, the Good Reason event (and Executive’s right to receive any benefit under this Agreement on account of termination of employment for Good Reason) will cease to exist. If SHO does not remedy the Good Reason event within the Sixty (60)-Day Period, and Executive does not incur a termination of employment within thirty (30) days following the earlier of: (y) the date SHO notifies Executive that it does not intend to remedy the Good Reason or does not agree that there has been a Good Reason event, or (z) the date on which the Sixty (60)-Day Period expires, the Good Reason event (or any claim of Good Reason) will cease to exist. Notwithstanding the foregoing, if Executive fails to provide written notice to SHO of the facts giving rise to a claim of Good Reason within thirty (30) days of the initial existence of such Good Reason event, the Good Reason event (and Executive’s right to receive any benefit under this Agreement on account of termination of employment for Good Reason) will cease to exist as of the thirty-first (31st) day following the later of its occurrence or Executive’s knowledge thereof. If Executive terminates his employment under clause (i) of this definition, his annual base salary rate for purposes of Section 1 hereof will be his annual base salary rate in effect prior to the reduction that triggered the applicability of such Good Reason event.

“ SHO Affiliate ” will mean any person with whom SHO is considered to be a single employer under Section 414 (b) of the Internal Revenue Code (the “ Code ”) and all persons with whom SHO would be considered a single employer under Code Section 414 (c), substituting “50%” for the “80%” standard that would otherwise apply.

“ Section 409A Threshold ” will mean an amount equal to two (2) times the lesser of (i) Executive’s base salary for services provided to SHO as an employee for the calendar year preceding the calendar year in which Executive has a Separation from Service; or (ii) the maximum amount that may be taken into account under a qualified plan in accordance with Code Section 40l (a)(17) for the calendar year in which Executive has a Separation from Service. In all events, this amount will be limited to the amount specified under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) or any successor thereto.

“ Separation from Service ” will mean a “Separation from Service” from SHO within the meaning of Code Section 409A (and regulations issued thereunder). Notwithstanding anything herein to the contrary, the fact that Executive is treated as having incurred a Separation from Service under Code Section 409A and the terms of this Agreement will not be determinative, or in any way affect the analysis, of whether Executive has retired, terminated employment, separated from service, incurred a severance from employment or become entitled to a distribution, under the terms of any retirement plan (including pension plans and 401(k) savings plans) maintained by SHO.

“ Specified Employee ” will have the meaning set forth under Code Section 409A (and regulations issued thereunder).

Intellectual Property Rights . Executive acknowledges that Executive’s development work or research on any and all inventions or expressions of ideas that may or may not be eligible for patent, copyright, trademark or trade secret protection, hereafter made or conceived solely or jointly within the scope of employment at SHO, provided such invention or expression of an idea relates to the business of SHO, or relates to actual or demonstrably anticipated research or development of SHO, or results from any work performed by Executive for or on behalf of SHO, are hereby assigned to SHO, including Executive’s entire rights, title and interest. Executive will promptly disclose such invention or expression of an idea to Executive’s management and will, upon request, promptly execute a specific written assignment of title to SHO. If Executive currently holds any inventions or expressions of an idea, regardless of whether they were published or filed with the U.S. Patent and Trademark Office or the U.S. Copyright Office, or is under contract to not so assign, Executive will list them on the last page of this Agreement.

Protective Covenants . Executive acknowledges that this Agreement provides for additional consideration beyond what SHO is otherwise obligated to pay to him. In consideration of the opportunity to receive the Severance Benefits, and other good and valuable consideration, Executive agrees to the following:

Non-Disclosure of SHO Confidential Information . Executive acknowledges and agrees to be bound by the following, whether or not Executive receives any Severance Benefits under this Agreement:

Non-Disclosure . Executive will not, during the term of Executive’s employment with SHO or thereafter, other than in the performance of his duties and obligations to SHO, including under the Offer Letter, during his employment with SHO, as required by law or legal process, or as SHO may otherwise consent to or direct in writing, reveal, disclose, sell, use, lecture upon or publish any SHO Confidential Information (as defined in Section 4(a)(iii) below) until such time as the information becomes publicly known other than as a result of its disclosure, directly or indirectly, by Executive.

ii.

Proprietary Information . Executive understands that if Executive possesses any proprietary information of another person or company as a result of prior employment or otherwise, SHO expects and requires that Executive will honor any and all legal obligations that Executive has to that person or company with respect to proprietary information, and Executive will refrain from any unauthorized use or disclosure of such information.

iii.

SHO Confidential Information . For purposes of this Agreement, “ SHO Confidential Information ” means trade secrets and non-public information which SHO designates as being confidential or which, under the circumstances, should be treated as confidential, including, without limitation, any information received in confidence from or developed by SHO, its long and short term goals, vendor and supply agreements, databases, methods, programs, techniques, business information, financial information, marketing and business plans, proprietary software, personnel information and files, client information, pricing, and other information relating to the business of SHO that is not known generally to the public or in the industry.

iv.

Return of SHO Property . All documents and other property that relate to the business of SHO are the exclusive property of SHO, even if Executive authored or created them. Executive agrees to return all such documents and tangible property to SHO upon termination of employment or at such earlier time as SHO may request that Executive do so.

Conflict of Interest . During Executive’s employment with SHO and during any Salary Continuation Period (which for purposes of this Section 4(a)(v) will not exceed twelve (12) months), except as may be approved in writing by SHO, neither Executive nor members of Executive’s immediate family (which will refer to Executive, any spouse, and any child) will have financial investments or other interests or relationships with SHO or any customers, suppliers or competitors which might impair Executive’s independence of judgment on behalf of SHO. Also during Executive’s employment with SHO during any Salary Continuation Period, Executive agrees not to engage in any activity in competition with SHO and to avoid any outside activity that could adversely affect the independence and objectivity of Executive’s judgment, interfere with the timely and effective performance of Executive’s duties and responsibilities to SHO, or that could otherwise conflict with the best interests of SHO.

Non-Solicitation of Employees . During Executive’s employment with SHO and for twelve (12) months following the Date of Termination, whether or not Executive receives any Severance Benefits under this Agreement, Executive will not, directly or indirectly, solicit or encourage any person to leave her or his employment with SHO, or assist in any way with the hiring of any SHO employee by any future employer or other entity.

Non-Competition . Executive acknowledges that as a result of Executive’s position at SHO, Executive has learned or developed, or will learn or develop, SHO Confidential Information and that use or disclosure of SHO Confidential Information is likely to occur if Executive were to render advice or services to any SHO Competitor.

Therefore, for twelve (12) months following the Date of Termination, whether or not Executive receives any Severance Benefits under this Agreement, Executive will not, directly or indirectly, aid, assist, participate in, consult with, render services to, accept a position with, become employed by, or otherwise enter into any relationship with (other than having a passive ownership interest in or being a customer of) any SHO Competitor.

ii.

For purposes of this Agreement, “ SHO Competitor ” means those companies listed on Appendix A , each of which Executive acknowledges is a SHO Competitor.

Restriction on Post-Employment Affiliation with SHO Vendors. Executive acknowledges that as a result of Executive’s position at SHO, Executive has learned or developed, or will learn or develop, SHO Confidential Information and that use or disclosure of SHO Confidential Information is likely to occur if Executive were to render advice or services to any SHO Vendor (as defined herein).

Therefore, for twelve (12) months from the Date of Termination, whether or not Executive receives any Severance Benefits under this Agreement, Executive will not, directly or indirectly, aid, assist, participate in, consult with, render services to, accept a position with, become employed by, or otherwise enter into any relationship with (other than having a passive ownership interest in or being a customer of) any SHO Vendor.

ii.

For purposes of this Agreement, “ SHO Vendor ” means, the vendors, if any, listed in Appendix A as well as any other vendor with combined annual gross sales of services or merchandise to SHO in excess of $200 million.

Compliance with Protective Covenants . Executive will provide SHO with such information as SHO may from time to time reasonably request to determine Executive’s compliance with this Section 4. Executive authorizes SHO to contact Executive’s future employers and other entities with which Executive has any business relationship to determine Executive’s compliance with this Agreement or to communicate the contents of this Agreement to such employers and entities. Executive releases SHO, their agents and employees, from all liability for any damage arising from any such contacts or communications.

Necessity and Reasonableness . Executive agrees that the restrictions set forth herein are necessary to prevent the use and disclosure of SHO Confidential Information and to otherwise protect the legitimate business interests of SHO. Executive further agrees and acknowledges that the provisions of this Agreement are reasonable.

General Release and Waiver . In connection with Executive’s termination of employment with SHO (whether initiated by SHO or Executive in accordance with Section (1)(a) above), Executive will execute a binding general release and waiver of claims in a form to be provided by SHO (the “ General Release and Waiver ”), which is incorporated by reference in this Agreement. The General Release and Waiver will be in a form substantially similar to the form attached as Appendix B to this Agreement. If the General Release and Waiver is not signed within the time articulated therein, or is signed but subsequently revoked, Executive will cease receiving Severance Benefits otherwise payable under Section 1(a) above. Further, Executive will be obligated to reimburse SHO for any portion of the Severance Benefits already paid to him.

Exception Request . Notwithstanding the foregoing, Executive may request a waiver or a specific exception to the non-competition provisions of this Agreement by written request to the Vice President of Human Resources or Vice President, General Counsel (or the equivalent) of SHO. Such a request will be given reasonable consideration and may be granted, in whole or in part, or denied by SHO in its absolute discretion.

Irreparable Harm . Executive acknowledges that irreparable harm would result from any breach by Executive of the provisions of this Agreement, including, without limitation, Sections 4(a), 4(b), 4(c) and 4(d), and that monetary damages alone would not provide adequate relief for any such breach. Accordingly, if Executive breaches or threatens to breach this Agreement, Executive consents to injunctive relief in favor of SHO without the necessity of SHO posting a bond. Moreover, any award of injunctive relief will not preclude SHO from seeking or

recovering any lawful compensatory damages on account of any harm which result from a breach of this Agreement, including a forfeiture of any future payments otherwise due hereunder, and a return of any payments and benefits already received by Executive under this Agreement.

Non-Disparagement . Executive will not take any actions that would reasonably be expected to be detrimental to the interests of SHO nor make derogatory statements, either written or oral to any third party, or otherwise publicly disparage SHO or its products, services, or present or former employees, officers or directors, and will not authorize others to make such derogatory or disparaging statements on Executive’s behalf. This provision does not, and is not intended to, preclude Executive from entering into any relationship with a SHO Competitor or SHO Vendor if such relationship is permissible under Section 4(c) or 4(d) and does not, and is not intended to, preclude Executive from providing truthful testimony in response to legal process or governmental inquiry.

Cooperation. Executive agrees, without receiving additional compensation, to fully and completely cooperate with SHO both during and after the period of employment with SHO (including any Salary Continuation Period), with respect to matters that relate to such period of employment, in all investigations, potential litigation or litigation in which SHO is involved or may become involved other than any such investigations, potential litigation or litigation between SHO and Executive. SHO will reimburse Executive for reasonable travel and out-of-pocket expenses incurred in connection with any such investigations, potential litigation or litigation, except in the case of litigation between SHO and Executive.

Future Enforcement or Remedy . Any waiver, or failure to seek enforcement or remedy for any breach or suspected breach of any provision of this Agreement by SHO or Executive in any instance will not be deemed a waiver of such provision in the future.

Acting as Witness . Executive agrees that both during and after the period of employment with SHO (including any Salary Continuation Period), Executive will not voluntarily act as a witness, consultant or expert for any person or party in any action against or involving SHO unless subject to judicial enforcement to appear as a fact witness only.

10.

Breach by Executive . In the event of a breach by Executive of any of the provisions of this Agreement, including, without limitation, the non-competition provisions (Section 4) and the non-disparagement provision (Section 6) of this Agreement, the obligation of SHO to pay Salary Continuation or to provide other Severance Benefits under this Agreement will immediately cease and any Salary Continuation payments already received and the value of any other Severance Benefits already received will be returned by Executive to SHO. Further, Executive agrees that SHO will be entitled to recovery of its attorneys’ fees and other associated costs incurred as a result of any attempt to redress a breach by Executive or to enforce its rights and protect its interests under this Agreement.

11.

Severability . If any provision or provisions of this Agreement is found invalid, illegal, or unenforceable, in whole or in part, then such provision or provisions will be modified or restricted so as to effectuate as nearly as possible in a valid and enforceable way the provisions hereof, or will be deemed excised from this Agreement, as the case may require, and this Agreement will be construed and enforced to the maximum extent permitted by law, as if such provision or provisions had been originally incorporated herein as so modified or restricted or as if such provision or provisions had not been originally incorporated herein, as the case may be.

12.

Governing Law . This Agreement will be governed under the internal laws of the state of Illinois without regard to principles of conflicts of laws. Executive agrees that the state and federal courts located in the state of Illinois will have exclusive jurisdiction in any action, lawsuit or proceeding based on or arising out of this Agreement, and Executive hereby (a) submits to the personal jurisdiction of such courts, (b) consents to the service of process in connection with any action, suit, or proceeding against Executive, and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction, venue or service of process.

13.

Right to Jury . Executive agrees to waive any right to a jury trial on any claim contending that this Agreement or the General Release and Waiver is illegal or unenforceable in whole or in part, and Executive agrees to try any claims brought in a court or tribunal without use of a jury or advisory jury. Further, should any claim arising out of Executive’s employment, termination of employment or Salary Continuation Period (if any) be found by a court or tribunal of competent jurisdiction to not be released by the General Release and Waiver, Executive agrees to try such claim to the court or tribunal without use of a jury or advisory jury.

14.

Employment-at-Will . This Agreement does not constitute a contract of employment, and Executive acknowledges that Executive’s employment with SHO is terminable “at-will” by either party at any time with or without cause and with or without notice.

15.

Other Plans, Programs, Policies and Practices . If any provision of this Agreement conflicts with any other plan, programs, policy, practice or other SHO document, then the provisions of this Agreement will control, except as otherwise precluded by law. Executive will not be eligible for any benefits under any transition or severance plan or program maintained by SHO.

16.

Entire Agreement . This Agreement, including the appendices hereto, contains and comprises the entire understanding and agreement between Executive and SHO and fully supersedes any and all other prior agreements or understandings between Executive and SHO, in each case with respect to the subject matter contained herein, and may be amended only by a writing signed by (a) one of the Vice President of Human Resources or the Vice President, General Counsel and Secretary (or equivalent) of SHO and (b) Executive.

17.

Tax Withholding . Any compensation paid or provided to Executive under this Agreement will be subject to any applicable federal, state or local income and employment tax withholding requirements.

18.

Notices . All notices and other communications hereunder will be in writing and will be given by hand delivery to the other parties or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive : At the most recent address on file at SHO.

If to SHO : 5500 Trillium Blvd, Hoffman Estates, Illinois 60192, Attention to both: VP, Human Resources and VP, General Counsel.

19.

Assignment . SHO may assign its rights under this Agreement to any successor in interest, whether by merger, consolidation, sale of assets, or otherwise. This Agreement will be binding whether it is between SHO and Executive or between any successor or assignee of SHO and Executive.

20.

Section 409A Compliance . To the extent that a payment or benefit under this Agreement is subject to Code Section 409A, it is intended that this Agreement as applied to that payment or benefit comply with the requirements of Code Section 409A, and the Agreement will be administered and interpreted consistent with this intent. If the Sixty (60)-Day Period following a Separation from Service begins in one calendar year and ends in a second calendar year (a “ Crossover 60-Day Period ”) and if there are any payments due Executive under this Agreement that are: (i) conditioned on Executive signing and not revoking a release of claims and (ii) otherwise due to be paid during the portion of the Crossover 60-Day Period that falls within the first year thereof, then such payments will be delayed and paid in a lump sum during the portion of the Crossover 60-Day Period that falls within the second year. Executive’s right to receive installment payments pursuant to this Agreement will be treated as a right to receive a series of separate and distinct payment.

21.

Construction and Interpretation . In this Agreement (1) “ includes ” and “ including ” are inclusive and mean, respectively, “includes without limitation” and “including without limitation,” (2) “ or ” is disjunctive but not necessarily exclusive, (3) “ will ” expresses an imperative, an obligation, and a requirement, (4) numbered “ Section ” references refer to sections of this Agreement unless otherwise specified, (5) section headings are for convenience only and will have no interpretive value, and (6) unless otherwise indicated all references to a number of days will mean calendar (and not business) days and all references to months or years will mean calendar months or years.

22.

Counterparts . This Agreement may be executed in one or more counterparts, which together will constitute a valid and binding agreement.

IN WITNESS WHEREOF, Executive and SHO, by its duly authorized representative, have executed this Agreement on the dates stated below, effective as of the date first set forth above.

Appendix A to Amended and Restated Executive Severance Agreement

SHO Competitors

The following companies (including affiliates and subsidiaries within the same controlled group of corporations) are included within the definition of SHO Competitors as referred to under Section 4(c)(ii)(l) of the Amended and Restated Executive Severance Agreement between SHO and Executive:

Ace Hardware

Lowe’s Home Improvement

The Home Depot

Menard

Whirlpool

ServiceMaster

Rent-A-Center, Inc.

Aaron’s, Inc.

ABT

Amazon

HHGregg

Conn’s, Inc.

Best Buy

Sears Holdings Corporation

Tractor Supply Co.

True Value Company

Wal-Mart

Target

Caterpillar

John Deere

SHO Vendors

The following companies (including affiliates and subsidiaries within the same controlled group of corporations) are included within the definition of SHO Vendors as referred to under Section 4(d) of the Amended and Restated Executive Severance Agreement between SHO and Executive:

Sears Holdings Corporation

Bosch

Electrolux

General Electric

Samsung

Whirlpool

MTD

Techtronic Industries Company Limited Husqvarna

A-1

Appendix B to Amended and Restated Executive Severance Agreement

GENERAL RELEASE AND WAIVER

NOTICE

YOU MAY CONSIDER THIS GENERAL RELEASE AND WAIVER FOR UP TO TWENTY-ONE (21) DAYS. IF YOU DECIDE TO SIGN IT, YOU MAY REVOKE THE GENERAL RELEASE AND WAIVER WITHIN SEVEN (7) DAYS AFTER SIGNING (“THE REVOCATION PERIOD”). ANY REVOCATION WITHIN THIS PERIOD MUST BE IMMEDIATELY SUBMITTED, IN WRITING, TO PHILIP ETTER, HUMAN RESOURCES, SEARS HOMETOWN AND OUTLETS STORES, INC., 5500 TRILLIUM BLVD., HOFFMAN ESTATES, IL 60192, AND STATE THAT, “I HEREBY REVOKE MY ACCEPTANCE OF THE GENERAL RELEASE AND WAIVER.” THE GENERAL RELEASE AND WAIVER WILL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED. YOU SHOULD CONSIDER CONSULTING WITH AN ATTORNEY BEFORE SIGNING THIS DOCUMENT.

In consideration of the payments and benefits I have received or will receive from Sears Hometown and Outlet Stores, Inc. (“ SHO ”), including, without limitation, those that I have received or will receive in accordance with the terms of the Executive Severance Agreement between myself and SHO, dated _________, 2015, I, William A. Powell , for myself, my heirs, administrators, representatives, executors, successors and assigns (collectively “ Releasors ”), do hereby release, waive, and forever discharge SHO and the current and former agents, parents, subsidiaries, affiliates, related organizations, employees, officers, directors, shareholders, attorneys, successors, and assigns of SHO (collectively, the “ SHO Parties ”) from any and all liability, actions, charges, causes of action, demands, damages, or claims for relief or remuneration, sums of money, accounts, or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown at this time, arising out of, or connected with, my employment with SHO or any of its subsidiaries and the termination of such employment. The foregoing release, discharge and waiver includes all claims and any obligations or causes of action arising from such claims, including but not limited to, all matters in law, in equity, in contract (oral or written, express or implied), in tort, or pursuant to statute, including claims under any federal, state or local statute or state or federal constitution, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. § 1981), the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification Act, the Family and Medical Leave Act , the National Labor Relations Act, the Equal Pay Act, or any other discrimination or/and employment laws of Illinois or of any other state or municipality , to the fullest extent permitted under the law.

This General Release and Waiver does not apply to any claims or rights that may arise after the date of execution of this General Release and Waiver. Also excluded from this General Release and Waiver are any claims which cannot be waived by law, including my right to file a charge with or participate in an investigation conducted by the Equal Employment Opportunity Commission. I do, however, waive any right to any monetary or other relief of any kind flowing out of any agency or third-party claims or charges, including any charge I might file with any state, local or federal agency.

B-1

I warrant and represent that I have not filed any complaint, charge, or lawsuit against the SHO Parties or any of them with any governmental agency or with any court. I agree never to bring a lawsuit against any of the SHO Parties in any forum for any claim covered by this General Release and Waiver. If I violate this General Release and Waiver by suing any of the SHO Parties, I agree that I will be liable to the SHO Parties for their reasonable attorney’s fees and other litigation costs and expenses incurred in defending against the lawsuit.

I also waive any right to become, and promise not to consent to become, a member of any class in any case in which claims are asserted against any of the SHO Parties that are related in any way to my employment with or the termination of my employment with SHO or any of its subsidiaries or affiliates, and that involve events which have occurred prior to the date of execution of this General Release and Waiver. If I, without my knowledge, am made a member of a class in any proceeding, I agree that I will opt out of the class at the first opportunity afforded to me after learning of my inclusion. In this regard, I agree that I will execute, without objection or delay, an “opt-out” form presented to me either by the court in which such proceeding is pending or by counsel for any of the SHO Parties.

I have read this General Release and Waiver and understand all of its terms.

I have signed it voluntarily with full knowledge of its legal significance and binding effect.

I have had the opportunity to seek, and I have been advised in writing of my right to seek, legal counsel prior to signing this General Release and Waiver.

I understand that the severance payments that I will be paid as an eligible participant under any transition pay or severance pay plan will be reduced by the amount of any advances, loans, or other amounts that I owe to SHO and its subsidiaries, including payments made for vacation taken but not earned.

I understand that I must notify SHO if I become employed during any applicable transition pay or severance pay period, and that transition pay or severance pay and benefits is subject to reduction or discontinuation as a result of new employment (including new employment with SHO, any of its subsidiaries, any successor company, or any outsource company).

I was given at least twenty-one (21) days to consider signing this General Release and Waiver. Any modification of this General Release and Waiver Agreement does not restart the twenty-one (21) day consideration period.

I understand that if I sign the General Release and Waiver, I can change my mind and revoke it within seven (7) days after signing. I understand the General Release and Waiver will not be effective until after the seven (7)-day revocation period has expired.

I understand that the delivery of the consideration herein stated does not constitute an admission of liability by any of the SHO Parties and that each of the SHO Parties expressly denies any wrongdoing or liability in connection with my employment with or the termination of my employment with SHO.

THIS IS A RELEASE. READ BEFORE SIGNING.

Signed by: ______________________________

Date: ___________, 20__

B-2

Exhibit 99.1

INVESTOR RELATIONS CONTACT:

Ryan D. Robinson,

Senior Vice President and Chief Financial Officer

847-286-8700

FOR IMMEDIATE RELEASE:

July 1, 2015

SEARS HOMETOWN AND OUTLET STORES, INC. ANNOUNCES NEW CEO

HOFFMAN ESTATES, Ill.—Sears Hometown and Outlet Stores, Inc. (the “Company”) (NASDAQ: SHOS) today announced that its Board of Directors has elected William (Will) A. Powell as the Company’s Chief Executive Officer and President, effective immediately. Mr. Powell succeeds W. Bruce Johnson, who as previously announced is stepping down as the Company’s Chief Executive Officer and President. The Board of Directors also has elected Mr. Powell as a member of the Board of Directors.

Mr. Powell has been Senior Vice President and Chief Operating Officer of the Company since its separation from Sears Holdings Corporation in October 2012. Prior to his employment with the Company he served as Sears Holdings’ Senior Vice President and President, Hometown Stores (at that time a division of Sears Holdings), positions he held from November 2008 to October 2012.

The Company also announced that the Board of Directors has elected E.J. Bird as the Chairman of the Board. Mr. Bird has been a member of the Board of Directors since the Company’s separation from Sears Holdings.

Mr. Bird said, “The Board of Directors is excited to have Will step into his new role as the Company’s Chief Executive Officer and President. He has served our Company for many years in roles of increasing responsibility and was an integral part of our separation from Sears Holdings. In his role as Chief Operating Officer, Will demonstrated a strong passion and understanding of our business. He has strong, long-standing relationships with our associates, dealers, franchisees, and vendors, an integral ingredient for our business. We believe that Will has the capabilities, experience, and leadership skills to drive changes the Company needs to improve its operating performance.”

Mr. Powell said, “I am honored and excited about the opportunity to serve as Chief Executive Officer and President of this great company and to work with our outstanding Board of Directors, executive team and associates, franchisees and dealers, and vendors. Together we will accelerate our business transformation initiatives, such as “America’s Appliance Experts” and our information systems transition. We will also focus on growing the profitability of our compelling assortments of home appliances, tools, lawn and garden equipment, sporting goods, mattresses, furniture, and household goods. Our actions will be guided by the voice of our customers, one of the greatest assets of this company.”

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including regarding the election of Mr. Powell as the Company’s Chief Executive Officer and President. The forward-looking statements are based upon current beliefs and expectations. These forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the Company’s control. Additional information concerning other factors is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015 and subsequent filings with the Securities and Exchange Commission. The Company intends the forward-looking statements to speak only as of the time made and, except as required by law, does not undertake to update or revise the forward-looking statements as more information becomes available.

About Sears Hometown and Outlet Stores, Inc.

Sears Hometown and Outlet Stores, Inc. is a national retailer primarily focused on selling home appliances, hardware, tools, and lawn and garden equipment. Our Hometown stores are designed to provide our customers with in-store and online access to a wide selection of national brands of home appliances, tools, lawn and garden equipment, sporting goods, and household goods, depending on the particular format. Our Outlet stores are designed to provide our customers with in-store and online access to new, one-of-a-kind, out-of-carton, discontinued, obsolete, used, reconditioned, overstocked, and scratched and dented products across a broad assortment of merchandise categories, including home appliances, lawn and garden equipment, apparel, mattresses, sporting goods, and tools at prices that are significantly lower than list prices. As of May 2, 2015 we or our independent dealers and franchisees operated a total of 1,248 stores across all 50 states as well as in Puerto Rico and Bermuda. Our principal executive offices are located at 5500 Trillium Boulevard, Suite 501, Hoffman Estates, Illinois 60192 and our telephone number is (847) 286-7000.