THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, January 4, 1995 TAG: 9501040389
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: By MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Medium: 53 lines
Smitten by increasing competition in the home-improvement superstore business and red ink, Builders Square is closing its Chesapeake store and the three others it operates in Virginia.
The Chesapeake store, located at 1591 Crossways Blvd. across from Greenbrier Mall, has been losing money, said Frank G. Felicella, Builders Square president and CEO. Builders Square's parent, Troy, Mich.-based Kmart Corp., won't subsidize its home-improvement chain, so Builders Square has decided to close its unprofitable stores.
The Chesapeake store and three others in Northern Virginia will be closed by March 5. San Antonio, Texas-based Builders Square also closed its Peninsula store recently.
``The Chesapeake store has never been a good store for us because we didn't have the store mass in that area or in the state of Virginia to support just those four stores,'' Felicella said. ``They're in an understored, underadvertised, highly competitive market.''
Opened on August 29, 1991, the Builders Square store in Chesapeake will lay off its 91 employees. Builders Square has said it will help its employees find other jobs, except for managers who can choose a severance package or an internal transfer within the company.
Builders Square is being squeezed out of Chesapeake by Home Quarters Warehouse Inc. and Lowe's, located nearby on Battlefield Boulevard, said retail analyst Kenneth M. Gassman. However, Felicella attributes his store'sclosing more to an internal reorganization.
``That (competition) has less to do with it than the fact that we've slowed our capital growth because of Kmart's imminent plans to spin off the division. We can only grow at a rate based on our own cash flow.''
Kmart already has spun off its Sports Authority and Office Max divisions and plans to sell off its bookstore subsidiaries, Waldenbooks and Borders Books.
After closing 15 stores in the East and Midwest, including the four stores in Virginia, Builders Square will convert 17 of its existing outlets to Builders Square II stores, which concentrate on home improvement and home decor.
``For a number of years, more aggressive competitors like Lowe's and Home Depot have taken share from Builders Square,'' said retail analyst John Eade at Argus Research. ``Builders Square has been losing sales on a same store basis. They took an extensive look at their format and retooled the format and reapplied store to store. They had to decide whether to reinvest in these poorer stores.'' by CNB