Hechinger to shut its Triangle stores in Pennsylvania

May 12, 1993|By Michael Dresser | Michael Dresser,Staff Writer

Hechinger Co. said yesterday that it will eliminate its six-store Triangle Building Centers division, closing the books on a foray into Pennsylvania that yielded only marginal profits.

John Hechinger Jr., chief executive of the Landover, Md.-based home improvement store chain, said the company was closing its smallest unit to concentrate resources on a "two-pronged approach."

That approach calls for a focus on upgrading Hechinger's traditional stores in the mid-Atlantic states to Home Projects Centers while expanding into the Southeast, Midwest and Northeast under the banner of its Home Quarters warehouses.

The Triangle shutdown is expected to have little impact on Hechinger's earnings. The chain accounted for about $80 million of Hechinger's $1.8 billion in annual sales, Mr. Hechinger said.

Even that small sales drop would be mitigated by Hechinger's decision to convert the Triangle store in Wilkes-Barre, the chain's largest, to a Hechinger Home Projects Center. That store accounts for between $25 million and $30 million of Triangle's sales, said Kenneth M. Gassman Jr., retail analyst with Davenport & Co. in Richmond, Va.

Mr. Hechinger said that some of the other Triangle stores were being considered for conversion but that most were not large enough or they overlap the market of an existing Hechinger store. The other stores in the chain are in Allentown, Bethlehem, York, Chambersburg and Quakertown.

The Triangle shutdown is expected to be completed by the end of October. The company said the cost of closing or converting stores would be covered by a "strategic reserve" that Hechinger set aside in the first quarter of 1992.

Hechinger Class A common shares closed yesterday at $9.375, up 25 cents.

Hechinger acquired Triangle for $27 million in a 1988 deal that was seen as opening the door for expansion in south-central Pennsylvania.

Mr. Hechinger said the Triangle chain had not been offered for sale because Hechinger hoped to keep many of Triangle's managers in the company by transferring them to Home Quarters or Home Projects Center stores.

Those among Triangle's 500 employees who are not offered new jobs will receive severance packages and outplacement assistance.

Analysts said Hechinger was making a good move by closing Triangle. "I don't think they're giving away that much, or they wouldn't be doing it," said Neal Kaplan, who follows retail stocks for Scott & Stringfellow in Richmond, Va.

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