In a major regional expansion, Hechinger Co., the Washington-based do-it-yourself hardware chain, yesterday announced plans to double the size of its retail selling space with 13 new stores from mid-Pennsylvania to Tide water Virginia over the next two years.
Officers of Hechinger's also told stockholders, at their annual meeting, that profits increased 15 per cent in the quarter ended April 30 to $419,256 (16 cents a share) compared with $365,109 (14 cents) in the 1976 period.
Sales rose 22 per cent to $22.3 million in the first quarter of the new fiscal year - the highest for any three-month period in the firm's 66-year history.
Currently one of the nation's seven largest retail building supply firms, Hechinger's has 17 stores and recently announced plans to grow outside the D.C. area with an initial store east of Baltimore.
Yesterday, chairman Richard England and president John W. Hechinger revealed far more ambitious growth plans. The expansion to markets distant from Washington will coincide with completion of the company's new headquarters and warehouse complex at Ardwick, in Prince George's County, with easy access to rail and highway transportation.
In an interview after the annual meeting, Hechinger said his farm's expansion Will cost between $10 million and $13 million, to be financed by internal cash generation and bank lending.
No new offerings to stock are planned and the expansion plans have led management to defer action on dividends for stockholders, the absence of which was raised again at yesterday's meeting.
Hechinger said the company's board will continue to review the possibility of stock or cash payouts in the future but noted that many of today's large companies waited eight years or more after "going public" before declaring an initial dividend.
The Washington company, whose stock is traded over the counter, went public in 1972 with an offering of 400,000 shares at $16 apiece. Despite rapid growth in sales and profits ever since, the company's tock has been a weak performer's and has been trading recently at under $6 a share.
Hechinger said the markets to which his firm is expanding all have high population density and a concentration of single-family homes, expected to be prime sources for Guilding supply firm growth. Specific plans include the following:
Three more stores in metropolitan Baltimore, for which lease negotiations are in progress. The initial Hechinger store there will open this fall near Golden Ring Mall and the three additional sites will open next year.
Stores in existing structures that will be converted to Hechinger branches later this year in Norfolk, Virginia Beach and the Newport News-Hampton area.
New stores in Harrisburg, York and Lancaster, Pa., with openings planned late in 1978, with a second store planned for Pennsylvania's capital city area.
Two branches in the Richmond area, for which locations have been identified.
Each of the new stores will have 60,000 square feet of selling space, a 20,000-square-foot garden center, 40,000 items of merchandise and parking for 300 cars. A typical new unit, the one planned for lLancaster, will employ 80 to 100 persons with an expected annual payroll of up to $500,000.
According to Hechinger's annual report, the firm also is studying sites in Delware and West Virginia for potential future expansion.
The new distribution center at Ardwick, to which Hechinger's will move later in this fiscal year, was designed to serve stores within a 200-mile radius. Stores are being concentrated in several markets to achieve economies in advertising, in addition.
After the firm moves its corporate headquarters out of the city, it plans to lease an 80,000-square-foot site in a proposed regional shopping center on the site of its current corporate office and retail unit at 901 17th St. NE, for a new store. The company said it hopes the center will stimulate new activity in the H Street business corridor.
Sales of Hechinger in the year ended Jan. 29 were $80.4 million and officers suggested yesterday that volume could reach $200 million annually in the 1980s. Wickes Corp., of San Diego, the retail hardware industry leader, has annual sales of more than $1 billion. No. 2 Lowe's Companies, which has been moving into the Washington market, has annual sales in excess of $340 million.
Nearly 85 per cent of Hechinger stock is owned by members of the Hechinger and England families. Not surprisingly, the firm's seven directors were elected for new terms; all are company officers. Many of the company's current buildings are leased from separate family-owned firms.