Hechinger reports smaller quarterly loss Firm says cost cuts spurred improvement

February 28, 1997|By Liz Bowie | Liz Bowie,SUN STAFF

After lowering its costs, Hechinger Co. reported yesterday it narrowed its fourth-quarter loss to $21.3 million, compared with a net loss of $81.5 million in the same quarter a year earlier, despite a drop in sales.

That translated to a loss of 51 cents a share for the 13-week period ended Feb. 1, compared with $1.83 in the year-ago quarter. Sales were $438.6 million, down 7.3 percent from $473.3 million. Same-store sales, considered the best measure of a retailer's sales strength because they don't include the effects of store openings, closings and expansions, were down 3.9 percent.

Chairman and Chief Executive Officer John W. Hechinger Jr. said the company cut the cost of goods it buys and reduced its administrative costs in order to improve operating results.

However, the Largo-based home improvement company still faces continued pressure from Home Depot Inc., which now has stores in nearly 80 percent of Hechinger's markets. Earlier in the week, Home Depot announced its fourth-quarter earnings rose 35 percent to $251 million, or 52 cents a share, its largest increase in two years.

Hechinger said he expects sales to improve in markets that Home Depot has been in for several years.

Bentley Offutt at Offutt Securities in Hunt Valley agrees.

"I think Hechinger store sales will stabilize. They have gotten their costs down by combining Hechinger's and Home Quarters stores. They should be a survivor," he said.

But, he added, "it is difficult to get very excited when you see this kind of a loss."

Year's figures

For the fiscal year, the company reported a net loss of $25.1 million, compared with $77.6 million from the year before.

The company's 1995 loss included one-time charges of $55.3 million and a $5.3 million income tax benefit.

Sales for the year were $2.2 billion, down slightly from $2.22 billion a year ago. Comparable store sales slipped 3.3 percent for the year.

Hechinger said he hopes to further stem the losses in the coming months by providing customers with better service than competitors.

Pub Date: 2/28/97

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