Hechinger says it lost money in last quarter

February 09, 1991|By Cindy Harper-Evans

Landover-based Hechinger Co. said yesterday that it anticipates a loss of several cents per share for its fiscal fourth quarter and that it has scaled back expansion plans for its do-it-yourself home-improvement centers because of the recession.

Earnings figures will not be released until mid-March, but President and Chief Executive John W. Hechinger Jr. said comparable-store sales -- those at stores open more than a year -- for the quarter, which ended last Saturday , declined about 11 percent.

Mr. Hechinger noted that last year's fourth quarter contained 14 weeks, compared with 13 weeks in the one that just ended. On a 13-week-to-13-week basis, comparable-store sales were down 5 percent.

The company earned $24.1 million, or 68 cents a share, in the first three quarters of the year. Revenues for the fourth quarter of Hechinger's previous fiscal year were $310.9 million, net earnings were $8.5 million, and earnings per share were 24 cents.

Analysts said yesterday that they were not surprised by Hechinger's announcement of an anticipated decline in per-share earnings. Sales of existing houses, a driving force behind home fix-up expenditures,dropped significantly in the fourth quarter.

Still, Hechinger shares fell $1 in over-the-counter trading yesterday, to $7.25.

"Last summer, it appeared as if the home industry was turning around, but when Iraq invaded Kuwait on Aug. 2 it put the industry in a free spin," said R. Bentley Offut, who follows Hechinger for Baltimore-based Offut Securities Inc.

Mr. Hechinger said weak consumer spending during the Christmas season and preoccupation with the Persian Gulf war in January contributed to the poor results.

Hechinger said it is planning less aggressive expansion for the year in light of an uncertain economy. The company now expects to open seven Home Quarters Warehouse stores, including four conversions from Hechinger stores, and two new Hechinger stores this year. That is down from the 14 Home Quarters stores and three Hechinger stores it had anticipated.

"While the company faces some uncertainty in 1991, experience has shown us that, following a recession, our sales actually increase due to pent-up demand," Mr. Hechinger said. "The company's low debt and large cash balances will afford us the financial flexibility to meet this demand when it arrives."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.