Eighteen months after its takeover by a California buyout firm, Hechinger Co. said yesterday that it has changed its top executive and shored up financing in an effort to rebuild its struggling operation.
Hoping to stem heavy losses and win back customers, the Largo-based home- improvement retailer has secured $700 million in credit from BankBoston Retail Finance Inc.
The credit line will give the company additional flexibility, said spokeswoman Lauri A. Rice.
Hechinger operates 206 Hechinger, Home Quarters and Builders Square stores in 28 states and Washington, D.C., not including the 34 stores that it said last month it intends to close by July.
The chain's new chief executive officer is Mark R. Adams, Hechinger's former executive vice president, chief financial officer and general counsel. He was appointed effective yesterday to replace Mark S. Schwartz, who has joined Big V/ShopRite supermarkets, a 32-store regional supermarket chain based in Florida, N.Y.
Schwartz came to Hechinger last March from Wal-Mart, where he'd been president and director general of the discounter's Super Center operations in Mexico.
The announcements cap a difficult period for the chain; competitors Home Depot Inc. and Lowe's Cos. have moved aggressively into Hechinger's markets with a successful format. During the most recent quarter, which ended Jan. 2, Hechinger posted a loss of $76.2 million. It also reported a steep slide in store sales -- 29 percent for all stores and 17 percent for sales at stores open at least a year, which is considered the best gauge of retail performance.
Hechinger had been struggling for some time when Leonard Green & Partners LP bought it from the Hechinger family in September 1997 and combined it with former Kmart Corp. subsidiary Builders Square.
Now the chain is closing stores, including one on Ritchie Highway in Glen Burnie, and is converting other stores to Home Quarters. Company officials say Home Quarters offers a broader assortment of merchandise, improved customer service and features such as a drive-through lumber department.
Another Hechinger store in Glen Burnie, in Southdale Plaza, should be remodeled as a Home Quarters store by mid-April, Rice said. A Hechinger in Columbia has been converted.
"Lowe's and Home Depot are the ones that have figured out the right formula for success and have been able to execute that formula," said Donald T. Spindel, a retail analyst with A. G. Edwards in St. Louis. "They do customer service better than most of their competitors. Others know what they need to do, but they've had problems pulling it off. When you're talking huge projects, you don't give a store too many chances."
Adams, who joined Hechinger in 1988, did not return telephone calls yesterday.
"In a few weeks, he'll be ready to talk about what direction he'll be wanting to head," Rice said.
Besides promoting Adams, Hechinger named Donald T. Stallings, a former vice president of operations with rival Lowe's Cos., to fill its vacant chief operating officer slot. Stallings joined Hechinger in October as executive vice president of store operations.
Hechinger Chairman Anthony Petrillo said yesterday in a statement that the BankBoston credit line should be final in about three weeks and that it will be "an important step in the ongoing rebuilding of the company."
Such moves might not have come too late to help the foundering chain, Spindel said.
"You need to demonstrate you have financial wherewithal, or the sharks start circling the boat. So that's a positive step," he said. "It's going to take some time. It wouldn't be an unusually long period to take, say, two or three years to turn something like this around."
Pub Date: 3/02/99