Landover-based Hechinger Co. has announced second-quarter earnings that are 28 percent higher than last year's earnings during the same period, exceeding many
Second-quarter net earnings rose to $13.9 million this year, compared with $10.8 million in 1990, Hechinger reported yesterday. Sales for the second quarter were also up from last year, gaining 18 percent in a rise from $389.7 million to $458.1 million.
Net earnings for the first half of fiscal 1991 were $21.0 million, up 9 percent from $19.2 million in fiscal 1990, the company reported. Sales rose to $849.5 million from last year's $734.3 million.
Cliff Ransom, institutional research director for Ferris, Baker Watts in Baltimore, said the increased earnings were "modestly better" than his firm had anticipated for Hechinger at this time.
He called the increase a "very nice rebound" for the company, which ran into trouble last year because of distribution and merchandising problems.
John Hechinger Jr., president and chief executive officer, said the improved second-quarter earnings were a result of increased customer demand and an improved economy. He also attributed the increase to the company's strategies for both its Home Quarters Warehouse and Hechinger divisions.
Hechinger Co. operates 118 outlets in 15 states and Washington, D.C., including 10 in the Baltimore area. The 118 include 83 Hechinger stores, 29 Home Quarters Warehouses and six Triangle Building Centers.
The company is using the Home Quarters Warehouses as an expansion vehicle outside the Washington area. Work was completed this week on the conversion of a Hechinger store in Fayetteville, N.C., to a Home Quarters Warehouse, company officials said.
Hechinger also is financing the conversion of all of its 83 Hechinger stores to Home Project Centers, a theme-store targeting the do-it-yourselfer.
The conversion depleted second-quarter earnings by $2 million to cover the costs of converting five stores to Home Project Centers, John Hechinger said.
"With the opening of our Largo, Maryland, store today, a total of eight Hechinger Home Project Centers are now in operation, and we expect to continue to convert stores to this exciting and innovative format on an ongoing basis,` he added.
Ransom said Hechinger's conversion and expansion plans amount to the company "girding its loins" in preparation for increased competition from warehouse giant Home Depot, which recently opened a store in Glen Burnie and is planning others in the Baltimore and Washington areas.
Ransom said Hechinger has a "strong lock" on the mid-Atlantic market and is expected to do well against Home Depot because of established customer loyalty, pricing, selection and service.