HomeBase To Close 22 Stores
IRVINE, Calif. (AP) _ HomeBase Inc., unsuccessful in making inroads against rivals Home Depot Inc. and Lowe’s Cos., announced it would exit the home improvement business, close 22 stores and convert the rest to home furnishings stores.
Irvine-based HomeBase plans to operate its remaining 67 stores under the House2Home name, said Herbert Zarkin, HomeBase’s chairman, president and chief executive officer.
``HomeBase made a valiant effort to sustain its position in the fiercely competitive home improvement market,″ Zarkin said, adding ``we do not foresee the pressures on the HomeBase business subsiding in the near term.″
The announcement was made Tuesday.
Home Depot is the country’s largest home improvement chain and has recently expanded in California. Lowe’s, the second-largest chain, also has a presence in California.
HomeBase, which has operations in nine western states, said it will take a charge of about $55 million to liquidate inventory. It also expects to post a net loss of about $80 million in the fiscal year ending January 2002.
The company posted a third-quarter loss of $10.3 million, including $4.8 million in expenses to launch five House2Home stores that opened in September in Southern California and Las Vegas.
Converting the additional 62 stores and closing 22 stores is expected to take 12 months, the company said.
Under the plan’s first phases that started this week, HomeBase will convert 18 stores and close 13. All but one of the closed stores are in California. The other is in Las Vegas.
The five initial House2Home stores had sales of $21.4 million, or about $4.3 million per store, from Sept. 9 to Nov. 25.
The company has enough financial resources to complete the House2Home changeover, said Michele Feller, who is in charge of HomeBase investor relations.
The company expects $180 million from selling its HomeBase products and has access to a $250 million credit line. House2Home sales should generate enough cash flow to allow the company to pay off its credit lines by January 2004.