THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, January 12, 1995 TAG: 9501120367
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Medium: 62 lines
Hechinger Co., the parent company of Virginia Beach-based HQ, said Wednesday that it will close 18 home-improvement centers, wiping out its presence in the Carolinas.
The two Southeastern states had become battlegrounds for three major hardware chains: HQ Home Quarters Warehouse Inc., Home Depot and Lowe's. Instead of battling on, HQ opted to pull out. It will close all 13 of its outlets in North and South Carolina this year.
``The plans announced today (Wednesday) are all driven by our objective to be the leader in the markets we serve,'' said John W. Hechinger Jr., president and chief executive officer.
Landover, Md.-based Hechinger company said that HQ lost market share in the Carolinas mainly because the region is overpopulated with home-improvement centers. But an analyst said HQ lost customers when a major price war escalated last year.
``When HQ tried to end the war by raising prices, neither Home Depot nor Lowe's followed suit,'' said Kenneth M. Gassman Jr., a retail analyst with the brokerage firm Davenport & Co.
``HQ quickly lost market share, and as a result, the Carolinas are now an unprofitable market for the company,'' Gassman said.
The Carolina stores have annual sales of about $12 million per store, much less than the $30 million-per-store average at the remaining 47 HQ centers.
As part of the plans announced Wednesday, Hechinger plans to close an HQ store in Alabama and four Hechinger stores - two in Rochester, N.Y., one in Roanoke and one in Fort Washington, Md. Also, four Hechinger stores in Ohio will be closed and replaced with larger HQ warehouses.
About 1,600 employees will be affected by the moves, company spokeswoman Iris Kesterman said. Hechinger will offer them severance pay and job-search assistance, and most Columbus-area employees will be offered jobs in the new warehouse stores.
Hechinger said the closings would result in a one-time charge of about $40 million, or 94 cents per share after taxes, in the fourth quarter of fiscal 1994, which ends Jan. 28, 1995.
The company still plans to open 10 to 12 HQ super-warehouses next year in Hampton Roads, New England and Detroit. Hechinger officials believe the new HQ stores, which are larger and offer more services, are the future for their company.
The first model opened in the Greenbrier section of Chesapeake in 1993. The 110,000-square-foot store includes a child-care center called Kids Quarters, a snack bar, a greenhouse and tools that can be rented. MEMO: Wire services contributed to this report.
ILLUSTRATION: Color HQ logo
by CNB