According to Reuters press, one of the country’s oldest home improvement retailers may have to file for bankruptcy protection in order to reorganize its finances. Hechinger’s, based in Largo, Maryland, was founded in 1911, but in recent years has been nailed to the floor by national chain competitors like Lowe’s and Home Depot. In 1998, Hechinger’s had $3.4 billion in sales, but over the past several years the company has shown nothing but negative numbers for its comparative store sales. Comp store sales in 1998 dropped by -15%, and -12% in 1997. The company controls 133 Builder’s Square stores, 46 Home Quarter stores, and 62 Hechingers. As of Oct, 1998, the company had started its fiscal year with 271 stores, but closed down 27 of them. Most of the stores are leased, only 17 are owned by the company. In its 10-K report to the Securities and Exchange Commission, Hechinger’s made it clear that companies like Home Depot had “materially adversely affect the company’s sales”. “There can be no assurance that the company’s financial results and condition will not be impacted negatively and materially by existing competition.” The company, which had 22.4 million square feet of selling space in 1998, failed to make a $4.7 million interest payment on its unsecured debt that was due last month, and S&P lowered its credit rating on Hechinger’s to a D. The company lost $228.4 million in the second three months of their fiscal year which ended April 3rd — a six times greater loss for a quarter over the same period last year.
Is Hechinger’s heading to the dustbin, where Grossman’s, Handy Andy, Rickles, Payless Cashways and other medium sized chains have ended their battle with Home Depot and Lowe’s? Will America end up with 2 places to buy a hammer? Will the consumer end up being the one who gets hammered? In the building supply business, the food chain has chewed up the mom and pops and the regional chains, leaving us nothing but the Big Hammer to shop at. Another one bites the dust…
