Sales off, Hechinger loses $6.4 million in quarter

November 16, 1995|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

Pounded for seven months by declining sales, Hechinger Co. reported yesterday a third-quarter loss of $6.4 million, nearly twice what the company earned in the same period last year.

The Landover-based home-improvement chain lost 15 cents per share for the three months ended Oct. 28, compared with net income of 8 cents, or $3.3 million, over the comparable period last year.

"It's disappointing, but it's not surprising," said W. Clark McClelland, Hechinger's executive vice president and chief financial officer.

Analysts echoed the sentiment.

"I wasn't surprised by it," Scott & Stringfellow analyst Neal Kaplan said of the latest results, which matched the lowest quarterly estimate of 12 Wall Street analysts. "It's not a good situation. I don't see the competition getting any easier for [Hechinger]. Lowe's and Home Depot are very strong competitors, and they're not backing off on Hechinger."

Boosted by new store openings, industry leader Home Depot Inc. of Atlanta reported a 25 percent increase in third-quarter income, but North Carolina-based Lowe's Cos., the No. 2 chain in the industry, absorbed a 19 percent drop for the period.

Hechinger, scaling back expansion plans and fending off competitors in its own markets, has felt the squeeze more acutely. The company, which operates 118 stores in 21 states and Washington, D.C., generated $549.2 million in third-quarter sales, compared with $633.9 million last year, a drop of 13 percent. Sales in stores open at least a year, a leading indicator of performance because it factors out new stores, fell 13 percent for the quarter.

For the first nine months of fiscal 1995, Hechinger reported net earnings of $3.9 million, or 9 cents per share, compared with net income of $29.3 million, or 69 cents per share, over the same period last year. Sales for the first nine months reached $1.8 billion, compared with $1.9 billion last year, a decrease of 9 percent. Comparable store sales were down 8 percent for the first nine months of fiscal 1995.

The retailer, however, still anticipates a turnaround.

"There are indications that housing turnover is on the rise, fueled by lower mortgage rates, which we believe will create a more positive sales environment in the future," Chairman and Chief Executive Officer John W. Hechinger Jr. said in a statement.

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