Blaming fierce competition in home improvement retailing, Largo-based Hechinger Co. reported a first-quarter loss of $76.2 million, along with a steep slide in store sales.
The retailer's loss, for the quarter ended Jan. 2, widened from a $47.7 million loss in the corresponding period a year earlier, the company said in a quarterly report filed Monday with the Securities and Exchange Commission.
Sales plummeted 29 percent to $658.3 million, from $922.8 million from a year earlier.
Sales at stores open at least a year, considered the best gauge of retail performance, fell 17 percent.
Company officials did not return phone calls yesterday.
In its filing, the company blamed declining sales on increased competition. Chains such as Atlanta-based Home Depot Inc. and Lowe's Cos. of North Wilkesboro, N.C., have aggressively entered Hechinger's market in the Baltimore/Washington region.
Slow sales hurt Hechinger's ability to leverage fixed costs, the company reported. Selling, general and administrative expenses, as a percentage of sales, rose to 25 percent compared with 19.3 percent in the first quarter of fiscal 1998, while the cost of sales accounted for 84.1 percent of sales compared with 81.6 percent the previous year.
Leonard Green & Partners LP bought the struggling chain from the Hechinger family in September 1997 and combined it with former Kmart Corp. subsidiary Builders Square. Hechinger now runs 240 stores under the Hechinger, Home Quarters Warehouse and Builders Square banners.
The company made plans earlier this month to close 34 underperforming stores and now is negotiating the sale of leases for 15 of those. The company did not say which stores it would close.
While Hechinger has suffered losses and sales slumps, its rivals have prospered.
Home Depot yesterday reported a 36 percent jump in fiscal fourth-quarter profit as home sales drove demand for remodeling products. Home Depot's net income rose to $418 million, or 27 cents a share, from $307 million, or 20 cents a share. Same-store sales climbed 9 percent, the company said.
Lowe's, which released financial results Monday for its fourth quarter ended Jan. 29, reported earnings of $106.2 million, a 46 percent increase. Earnings per share climbed 43 percent, to 30 cents a share from 21 cents a share, Lowe's said. Comparable store sales rose 8.2 percent, the retailer said.
Pub Date: 2/24/99