Hechinger Co. reported yesterday a sixth consecutive month of faltering sales, triggering a plunge in the home improvement chain's stock to its lowest level of trading in at least 12 years.
September sales at the Landover-based retailer dropped 13 percent to $219.1 million, compared with $251.5 million over the same period last year. Sales in stores open at least a year, a crucial gauge of performance because it factors out new stores, fell 13 percent.
"There's such a high level of concern about Hechinger's future that investors don't want to own shares," said analyst Kenneth M. Gassman Jr. of the Richmond, Va., investment house Davenport & Co.
Hechinger Class A shares closed yesterday at $3.75, down 25 cents, after trading as low as $3.375. Just three months ago, the stock was fetching more than twice that, and it was as high as $25.50 less than nine years ago.
But for all of the retailer's Wall Street woes, Hechinger's book value -- assets minus liabilities -- remains more than $11 per share as of April.
"In the words of Mark Twain, reports of our death are greatly exaggerated," Hechinger Chief Financial Officer W. Clark McClelland said yesterday in a conference call with securities analysts.
Even more, Hechinger wasn't the only do-it-your-self chain that took a hit in September. Same-store sales slipped 5 percent for the month at Lowe's Companies Inc. of North Carolina and dropped 10 percent at Builders Square, a division of Michigan-based Kmart Corp. Industry leader Home Depot of Atlanta does not report monthly sales.
The decline at Hechinger was attributed to "the large decline in housing turnover this year, a key driver of home improvement sales," John W. Hechinger Jr., chairman and chief executive, said in prepared remarks. "Second, we are absorbing additional competitive incursions" from other retailers.
Because Hechinger plans to build only one new store next year, analysts are concerned that the 117-store chain will lose even more ground to competitors. But in a move to shore up its financial position, the company is consolidating management and operations, which officials project will result in about $20 million in annual pretax savings.
"It's a process, we're working on it," said Vice President Richard S. Gross.
"I think we will see the benefits from the combined merchandising organization soon, but I can't be specific."