WASHINGTON -- Last year, shareholders flocked to Hechinger Co.'s annual meeting to applaud the home improvement chain's improving sales and stock price. This year, sales are down, the stock price is low, and investors came bearing questions.
"Why is Hechinger doing worse than all its competitors in same-store sales?" asked one stockholder.
Can the Landover-based company recoup sales lost during a slow spring season? another queried.
And a third offered more of a statement than a question: "Last year, I didn't say a word [during the annual shareholders meeting] because Hechinger was making money and looking like roses," said investor Bill Davis of Arlington, Va. "Now, the roses died, and people are more outspoken."
Unruffled and forthright, President and Chief Executive John W. Hechinger Jr. was positive yesterday as he fielded questions from about 120 shareholders gathered under the vaulted ceiling and gilt trimmings of the Stouffer Mayflower Hotel in Washington, D.C.
"We basically fell off a cliff in April and May," Mr. Hechinger acknowledged during a spirited question-and-answer session. "And frankly, I don't think we got stupid that fast."
Sales in Hechinger stores open for at least a year fell by 8 percent in May after dropping 10 percent in April, compared with the same months in 1994. Last week, the company was greeted by more sobering news: Hechinger Class "A" shares hit a 52-week low at $6.94. Hechinger's Class A shares closed yesterday at $7.25, up 12.5 cents.
The culprits, the company said, were the weather, a slow-down in home sales and tough competition from other retailers like Home Depot. The result: less demand for home improvement items, such as lights, lumber and lawn mowers, during the spring, usually the strongest shopping season for Hechinger.
"In this past year, our spring got delayed so far . . . actually some of it was lost," Mr. Hechinger said.
Nevertheless, the company president was optimistic yesterday, saying how Hechinger stores lowered prices, improved average sales per store and reduced operating costs.
He highlighted the firm's "Chesapeake Class" Home Quarters Warehouse stores, remodeled with improved services and a broader selection of merchandise. And he cited the bright, spacious look of the company's "Home Project Centers," plans to remodel about six stores a year and add new stores on Wisconsin Avenue in Washington, D.C., Deptford, N.J., and Exton, Pa.
Last year "was a year in which we stabilized the business, we protected our market share and improved our operating profits," he said.
Some investors, however, were more interested in the company's recent performance. For the first quarter ended April 29, the company earned 3 cents per share, down 75 percent from what it earned in the same period last year.
"It's pretty ominous," said financial consultant Bernard J. Lucci of Jeffersonville, Pa.
Mr. Hechinger, however, said he did not notice a difference in atmosphere between this year and last year's annual shareholders meeting: "I do not have a sense of a different tone."