National has profitable 1Q

Home Channel News, May 24, 1999

Springfield, Ark. -- National Home Centers reported its first first-quarter profit in five years. For the three months ended April 3, National's income was $212,000 vs. a $1.6 million loss for the same period a year ago.

Quarterly sales fell 13.3 percent to $25.3 million, though same-store sales grew 5.2 percent.

National Home Centers finished the quarter operating eight stores vs. 10 in the same period a year ago. The company -- which sold off two retail locations last year and trimmed its retail inventory in an attempt to return to profitability - now has nearly reached its goal of generating 85 percent of its business from professionals, according to Brent Hanby, National's executive vp-finance and CEO.

Between 80 to 85 percent of National's sales came from pros in the first quarter of 1999, he said. In fourth-quarter 1998, pros accounted for 78 percent of the company's revenue.

"Our main goal has been to get back in the black," Hanby said. While the company closed locations last year, National is starting off this year with plans to open a small showroom in Hot Springs, Ark., by the end of this month. The 5,000-squarefoot showroom will be staffed by two to three outside salespeople and will be used to display fewer than 100 skus of lighting, roofing, molding, doors and appliances. Orders will be filled from National's headquarters store in North Little Rock.

The company also plans to revamp its Web site by the end of this month, with photos and descriptions of a number of products, including windows and doors. National is redoing the site in-house and has no plans to sell products online at this point, said Hanby.

Despite these plans and its profitable first quarter, National Home Centers is far from being out of the woods. The company reported a 30.5 percent drop in 1998 revenues to $104.75 million. The dealer lost $2.96 million in 1998 vs. a $13 million loss in fiscal year 1997, and its comp-store sales for the fall year declined 13 percent.

In the fourth quarter ended Jan. 31, 1998, sales fell 34.8 percent to $20.6 million. The dealer incurred a quarterly net loss of $972,000, compared to a loss of $9.36 million in the same quarter a year ago, which included a $6.7 million charge related to liquidations from store closings. The company's quarterly comp-store sales fell 12 percent. One bright spot last year was National's inventory turnover, which improved to 5.7 times from 4.3 times in fiscal 1997.