Hechinger profit jumped 44% in the first quarter

May 20, 1994|By Joel Obermayer | Joel Obermayer,Sun Staff Writer

Hechinger Co. reported sharply higher first-quarter earnings yesterday, offering evidence that cost-cutting and revamping in its chain of hardware stores is beginning to pay off.

For the three months ended April 30, Hechinger Co.'s profits were $4.6 million, or 11 cents a share, a 44 percent jump from a year earlier, when profits were $3.2 million, or 8 cents a share. Sales increased 20 percent, to $574 million, and comparable-store sales were up 6 percent.

Analysts said the latest results show the company successfully has cut costs at its 72 Hechinger hardware stores in the Mid-Atlantic region and has converted many to a new larger "home project" format. Those stores had seen their profit margins squeezed and had been losing market share to rivals such as Home Depot.

Meanwhile, the company's Home Quarters Warehouse division is continuing to post big gains.

Operating income in the Hechinger Stores division increased 28 percent, to $5.5 million, as sales in that division increased 4.8 percent, to $262 million. Home Quarter Warehouse stores, the home project stores the company has been operating outside its mid-Atlantic base, grew at an even faster pace. Operating income for the Home Quarters division jumped 81 percent, to $14.2 million, as sales increased 48 percent, to $312 million.

"The big surprise is Hechinger [stores]. The company appears to have turned around its Hechinger division after two or three years of languishing," said Kenneth M. Gassman, a retail analyst with Davenport & Co. of Richmond, Va. "Everyone knew Home Quarters was on a roll."

Since last summer, the Home Quarters Warehouse division has been building new stores in a larger format, which includes features such as a service desk for contractors, power tool rental, a snack bar and child care facilities. The division now has 56 stores in 23 states.

Executive Vice President and Chief Financial Officer W. Clark McClelland said that in the Detroit market, where Home Quarters stores in the new format have gone head-to-head with Home Depot stores for the first time, their sales have continued to grow.

Hechinger Co. .. .. .. .. .. Ticker ... ... Yesterday's

.. .. .. .. .. .. .. .. ... Symbol ... ... Cls. ... Chg.

. .. .. .. .. .. .. .. .. .. HECH-A. ... 14 15/16 ... -7/16

. .. .. .. .. .. .. .. .. .. HECH-B. ... .. 15 1/4 .. -

Period ended

4/30/94 .. .. .. .. .. .. 1st qtr. ... .. Year ago ... Chg.

Revenue .. .. .. .. .. .. $574,301 ... .. $479,144 ... +19.9%

Net Income .. .. .. .. .. $4,645 .. .. .. $3,228 .. .. +43.9%

Primary EPS ... .. .. ... $0.11 ... .. .. $0.08 ... .. +37.5%

Figures in thousands (except per share data.)

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.