Heck's: hello, Take 10, goodbye Chapter 11 - Heck's Inc., discount store chain, to rename stores Take 10, and change to warehouse store format

Discount Store News, Oct 16, 1989

Heck's: Hello, Take 10; Goodbye Chapter 11

NITRO, W.Va. - Heck's has emerged from Chapter 11 with a new operating name, Take 10 Discount Club, and a new concept to set itself apart.

Heck's emerged Sept. 28 with 55 stores remaining, about 2,500 employees and expected annual sales in excess of $200 million. At its peak in 1986, Heck's operated 165 stores, employed 5,900 and rang up revenues of $500 million.

As its new name suggests, Heck's now will operate on a membership club basis, with annual fees of $10.

Non-members still will be able to shop at Take 10. But they will pay ticketed prices. Members will be able to "take 10" percent off posted prices.

A frequent shopper bonus is another major element of the Take 10 concept, said Heck's president John Isaac. When customers check out, they present their cards and cashiers key in both their membership numbers and amount of purchase, just as at a wholesale club.

Every time their purchases total $200, a computer-controlled system will cut them a check for $5, Isaacs said, equal to a further discount of 2.5 percent.

In tests conducted at eight stores, both the average ticket and total sales volumes increased beyond target projections, Isaac said.

Heck's has set a goal for each store of the number of members needed to make the concept viable, but Isaac declined to reveal how many members, on average, a store must recruit to be profitable.

Other aspects of the program include a $5 bonus for bringing in a new member; a free family color photo each year; and, special check cashing privileges: $10 more than the amount of purchase.

Heck's expects to roll out the Take 10 program to all stores by Oct. 21. Exterior store signage would be changed by next year.

In-store signage comes in the new Take 10 color scheme of red, white and blue, replacing the traditional Heck's red and yellow color scheme.

For the first two weeks after conversion, Heck's will waive the first year's membership fee. For the next 30 days, the first year's membership the first year's membership fee will be cut to $5. Afterwards, new members will pay the full $10 fee, Isaac said.

Heck's declared Chapter 11 bankruptcy in March 1988. It emerges with more than $50 million in tax loss carry-forwards that would be advantageous in acquiring other companies, Isaac said.

Upon emerging, Heck's canceled all its existing stock and issued new stock that trades on the NASDAQ system. On a fully diluted basis, assuming all warrants, or rights to buy additional stock, are exercised, creditors would own 70 percent of Heck's stock, and the Hallwood Group, New York merchant bankers that served as Heck's financial advisors in bankruptcy, 15 percent.

The original shareholders would be left with about 7.5 percent of the company's equity. Management would own the balance of 7.5 percent, assuming they exercise the warrants they purchased as part of the debt settlement.

Through cash, stock and bonds issued, creditors salvaged about 50 cents on the dollar.