THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Thursday, August 18, 1994 TAG: 9408180587
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Medium: 56 lines
Home Quarters Warehouse, the Virginia Beach-based home improvement retailer, may no longer be the only growth vehicle for its parent, Hechinger Co.
On Wednesday, Hechinger Co. announced it is expanding into Mexico with its Hechinger Store interior home decor division, the Home Project Center.
Four new home decor stores will open in Mexico City in 1995, the company said.
``It's only four stores out of 130, so it's about 3 percent of the total store percentage,'' said retail analyst Kenneth Gassman Jr. of Davenport & Co. ``But it is a big deal.''
Hechinger wanted to capitalize on Mexico's 92 million population, company officials told analysts. According to studies by Landover, Md.-based Hechinger, the Mexican lifestyle centers around family and the home. The mature housing market in Mexico translates into families adding and renovating their existing homes.
Hechinger's Mexican stores will concentrate on home decor and less on lumber. The company already has chosen one location in Mexico City for a new store. The stores will not carry the Hechinger's name.
Attention was diverted from HQ's strong revenues for the second quarter, but the company's position as the foundation of Hechinger Co. was apparent.
``(CEO) Frank Doczi's operation continues to drive Hechinger Co.'s growth,'' Gassman said of HQ.
HQ's net sales rose 40.2 percent for the second quarter compared to the same period a year ago. Sales for the period ended July 30 were $387.6 million compared to $276.4 million for the same quarter in 1993.
Hechinger did not choose HQ as its arm of expansion in Mexico because HQ already has several plans for the domestic market.
``Why not HQ? Because it's got a full plate. They have a niche, they're focused, they're doing well,'' Gassman said.
``HQ is our primary growth vehicle in the domestic market,'' said Richard S. Gross, corporate controller. ``It has a terrific agenda. This (Mexican expansion) does not affect that at all.''
Comparable store sales rose 1 percent at HQ, Gross said. Operating income for HQ rose 44.6 percent from the second quarter in 1993. Operating income was $23.7 million compared to $16.4 million last year.
Earnings for the Hechinger parent company were up 19 percent to $21.4 million compared to $17.9 million last year.
During the second quarter, HQ opened its fifth store in the St. Louis market and its third store in the Kansas City market. The company will open three new stores and relocate two - the Wards Corner and Virginia Beach Boulevard stores - to new spots. by CNB