After absorbing $77.6 million in losses during fiscal 1995, Landover-based Hechinger Co. reported yesterday another quarter in the red -- a net loss of $6 million, or 14 cents per share, for the first quarter of 1996. Over the same quarter last year, Hechinger earned $1.2 million, or 3 cents a share.
If not for a cold March, the retailer said it would have been marginally profitable for the quarter, which ended May 4.
"For us, weather is a key driver," said Hechinger Executive Vice President W. Clark McClelland. "You're not going to do anything in your yard if it's raining. That's just the way it is."
Hechinger, which depends on do-it-yourself consumers who fix and beautify their own homes, generated $561.3 million in sales for the quarter, up 1 percent from $553.2 million during last year's comparable period. But sales in stores open at least a year -- a central indicator of a retailer's performance -- fell 3 percent for the quarter.
"I don't think it was particularly worse than expected, but there was bad weather, and they've been having a tough time," said analyst Neal Kaplan of Scott & Stringfellow in Richmond, Va.
Of Hechinger's future, Kaplan said, "I'm cautious. I wouldn't call myself optimistic, but I wouldn't call myself pessimistic."
Hechinger, the subject of a speculated Sears takeover, is hopeful. Not only is the weather improving, it appears that the housing industry -- another key driver -- is picking up. And last month, the retailer reported its first gain in 13 months in sales at stores open at least a year, up 1 percent.
If history is any guide, analysts say, the second quarter should be better. For Hechinger, spring is the height of its selling season, much as Christmas is for other retailers.
Gearing up, the retailer has allotted $60 million to renovate many of its 118 stores and has shifted $10 million to $15 million from print to television and radio advertising. In addition, Hechinger is trying to boost its customer-service image, offering two trained gardeners per store every weekend.
And in a signal to both employees and the investment community, the company has reduced its debt by $28 million in the first quarter, maintained $84 million in cash and continued to consolidate operations.
"What we're trying to convey to anyone who cares is that we have the financial resources to execute our plans," McClelland said.
Pub Date: 5/24/96
