The do-it-yourself instincts of area homeowners hit Hechinger Co. with a bang in the year ended Feb. 3, as profits soared 48 percent to a record level.
But the Landover-based chain of 23 retail home centers said yesterday that the recent gains reflected primarily higher company productivity, since the average price increase of items stocked by Hechinger's rose only 6.4 percent in the 53-week period.
In addition, Hechinger announced that its management will recommend a 20 percent stock divident to stockholders at the annual meeting on June 21. The retail firm had been criticized for many years for not having dividends until it inaugurated the practice last year with a 4 percent stock dividend paid in August and regular quarterly cash payouts of 3 cents a share started in july.
Earnings in the recent year were $3.45 million ($1.22 a share) compared with $2.34 million (83 cents) in the previous 12 months as sales rose 20 percent to a record $111 million.
The jump in profits came despite new accounting rules on capitalization of certain leases which reduced earnings by $239,820 (8 cents) a year ago.
For the fourth quarter alone, Hechinger's profits and sales also were at record levels. Earnings stotaled $1 million (38 cents a share) on sales of $30 million compared with profits of $532,273 (19 cents) and revenues of$22 million.
President John Hechinger and Chairman Richard England, in a joint statement, attributed the profitability gains to benefits from consolidation of warehousing, distribution and corporate headquarters operations at Landover last April.
Improved inventory techniques contributed to the lowest rate of inventory shrinkage in Hechinger's 68-year history, they said. Investment tax credits related to equipment purchases for the new headquarters complex and four new stores added $465,000 to earnings in the recent year compared with $165,000 in the prior period.
If the proposed 20 percent stock dividend is approved, it would be paid in July or August, the company stated.