One-time charges cause Hechinger loss Operating gains wiped out in 'messy' quarter.

March 10, 1992|By Michael Dresser | Michael Dresser,Staff Writer

Hechinger Corp., the Landover-based home improvement chain, posted a 4-cent-a-share loss yesterday as one-time charges wiped out respectable operating gains during what one analyst termed a "messy" quarter.

Without three charges -- amounting to $8 million -- Hechinger would have posted income of $3.8 million, or 9 cents a share, in the three months that ended Feb. 1. The company lost $849,000, or 2 cents a share, during the year-earlier period.

Results in the most-recent quarter were aided, however, by a positive adjustment of $2.2 million for an accounting change.

If the one-time gain and three one-time charges are excluded, the profit comes to about 5 cents a share, said Budd Bugatch, research director for Ferris Baker Watts in Baltimore -- a penny more than he predicted.

"It's not a bad report," Mr. Bugatch said. "It just looks messy."

Kenneth M. Gassman Jr., a retail analyst with Davenport & Co. in Richmond, Va., had a similar conclusion. "On an operating basis, things actually look pretty good," he said. He added that although he was surprised by the magnitude of the charges, Hechinger's gross margins for the quarter were "fabulous."

Sales for the quarter were up 16 percent compared with the previous fourth quarter, and sales at stores also open a year ago rose 5 percent.

Lennie Zallar, a Hechinger spokesman, noted that sales were being compared with an extremely weak quarter last year, when the onset of war sent sales reeling.

"Is it 'Happy Days Are Here Again'? No," said Mr. Zallar. Still, he said, "Better is better."

The fourth-quarter charges were taken to account for the costs of closing seven Hechinger stores, most of them in the Carolinas, in January. Others involved the sale of the company's receivables to General Electric Capital Corp. and a change in accounting methods.

The two analysts disagreed on the significance of the charges. Mr. Bugatch said they were "non-recurring" items, but Mr. Gassman was less forgiving. "These charges are not non-recurring or things I would throw out," he said.

After the mid-afternoon earnings report, Hechinger "B" stock closed down 25 cents at $12.50.

Three months ending 2/1/92

... ... Revenue ... ... ... ... Net ... ... ... ... Share

'92 ... 360,970,000 .. ... ... (1,500,000) .. ... (0.04)

'91 ... 309,829,000 .. ... ... (849,000) .. .. .. (0.02)

% change ... +16.5 ... .. .. .. -- ... ... .. .. .. --

12 months ending 2/1/92

... ... Revenue ... ... ... ... Net ... ... ... ... Share

'92 ... 1,607,727,000 .. .. .. 26,055,000 ... ... 0.66

'91 ... 1,392,198,000 .. .. .. 23,259,000 ... ... 0.65

% change ... ... +15.5 .. .. .. +12.0 ... ... .. .. +1.5

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