Sales growth boosts Hechinger 2nd-quarter earnings

BY THE NUMBERS

August 25, 1992|By Michael Dresser | Michael Dresser,Staff Writer

Hechinger Co., a Landover-based home improvement store chain, reported a healthy increase in second-quarter earnings yesterday as increased sales offset price cuts that the company absorbed to hold on to its market share in the Baltimore-Washington area.

Earnings for the quarter ended Aug. 1 rose 12 percent to $15.5 million, or 36 cents a share, compared with $13.9 million, or 35 cents a share, in the same quarter last year.

Hechinger had been projecting flat or slightly decreased earnings per share. The small increase was "a little better than we expected," said W. Clark McClelland, the company's senior vice president for finance.

Sales for the quarter were up 20 percent to $549.7 million, compared with last year's $458.1 million. At stores that were also open a year ago, sales rose 10 percent.

In May, Hechinger announced heavy price cuts at its traditional Hechinger stores to bring them in line with its new Home Project Centers and to help stave off the growing challenge from Atlanta-based Home Depot Inc. The move cut Hechinger's gross margins by 120 basis points (1.2 percentage points), according to Mr. McClelland.

Strong sales gains at both the Hechinger division and the Home Quarters Warehouse division helped make up for the thinner margins, the company said. In addition, Hechinger cut its administrative costs as a percentage of expenses from 20.3 percent to 19.7 percent, Mr. McClelland said.

For the first half, Hechinger reported a loss of $35.6 million, or 85 cents a share, compared with positive earnings of $21.0 million, or 55 cents a share, in fiscal 1991.

The loss reflects the impact of the $57.3 million after-tax strategic reserve the company set aside in the first quarter to pay for the cost of marking down inventory and the conversion of its stores to Home Project Centers. Without that reserve, earnings would have been $21.7 million, or 52 cents per share.

Three months ending 8/1/92

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

'92 . ..549,673,000 . ..15,457,000 .0.36

'91 . ..458,120,000 . ..13,850,000 .0.35

% change .. .. +20.0 . .. .. . +11.6 . +2.9

Year ending 12/31/91

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

'92 . ..989,549,000 . .. (35,584,000) . .. (0.85)

'91 . ..849,485,000 . .. .21,019,000 .. .. .0.55

% change .. .. +16.5 . .. .. .. ... NA .. .. ... NA

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