Hechinger sales up 6 percent at older stores

September 02, 1994|By Patricia Horn | Patricia Horn,Sun Staff Writer

Sales at Hechinger Co. stores open at least one year climbed 6 percent in August, the company reported yesterday, an improvement that pleased both its executives and analysts.

The big surprise was the Hechinger Stores division of the Landover-based company, a leading home improvement retailer. Sales at those established stores rose 7 percent over the same period last year. Those stores, centered in Philadelphia, Baltimore and Washington, D.C., have faced stiff competition from Home Depot Inc.

Same-store sales at Home Quarters Warehouse stores, the division Hechinger has been expanding most aggressively, rose 4 percent over last August.

Analysts consider sales in stores open for at least a year a key measure of retail health because the statistic removes growth attributable solely to new stores.

"We expected significantly lower than 7 percent" for Hechinger Stores, said Hechinger executive vice president W. Clark McClelland. "Home Quarters is on plan with a 4."

Hechinger operates 131 home center stores in 23 states and the District of Columbia. It competes for shoppers against Home Depot, Lowe's and other growing home-center warehouse stores.

Kimberly Howard, an analyst with Dillon Read & Co. in New York, was pleased with Hechinger's sales and considers the stock her favorite in the home improvement category. "The Hechinger store numbers were very surprising, much stronger than I was looking for," she said.

"Retail has been kind of blase. People are spending on their homes," Ms. Howard said.

"That is a reflection of the demographics and the fact that there is nothing much exciting in apparel. You have to put [your money] somewhere, so people put it in their homes," she added.

R. Bentley Offut of Offut Securities in Baltimore said he thinks Hechinger Stores' August promotions paid off and renovation and relocation of older Home Quarters stores has brought up those sales figures.

"The pricing has stabilized in this region this year, and hopefully that will improve Hechinger Stores' profitability," said Mr. Offut.

Mr. Offut has raised his estimate of earnings to 85 cents from 82 cents for this fiscal year and raised his estimate for fiscal year 1996, which closes in January 1996, to $1.05.

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