Demonstrating how economic conditions can help some businesses and hurt others in the same field, Woodward & Lothrop yesterday reported a sharp drop in profits for last year and Hechinger Co. turned in a staggering gain.
Hechinger's profits jumped 59 percent to $5.5 million ($1.60 a share) from $3.4 million ($1.02), while the home improvement center's sales for the year soared 32 percent to $146.8 million from $111.2 million.
Woodward & Lothrop earnings slipped 17.9 percent to just over $10 million ($4.10) from $12.2 million ($5.34). Sales increased 8.9 percent to $295 million from $271 million, but didn't keep up with the inflation, said Woodies' Chairman Edwin K. Hoffman.
The dramatically different results from the two Washington-based retailers apparently reflect the way consumers change their buying habits because of inflation.
Consumers are holding back on buying clothing and the like, so department store sales have been soft for several months. Woodies' volume for the fourth quarter -- including the Christmas season -- increased less than 3 percent over the previous year.
When times get tough, however, consumers frequently spend more money to fix up their homes because that costs less than buying a new house. That phenomenon brings more business to Hechinger and others in the home improvement field.
Hechinger executives said part of their increase in sales and profits came from opening three new stores last year, but sales from older units were also up significantly.
Much of the sales gain apparently came from a decision to match the prices of major competitors, the company said. Gross profit margins went down as a result, but sales increases more than made up for the decline.
Unlike Woodward & Lothrop, Hechinger reported business stayed strong through the final quarter of the year. Fourth-period sales increased 27 percent to $37.7 million from $29.7 million, and earnings jumped to $1.8 million (51 cents) from $1.1 million (32 cents).
Woodies' fourth-quarter volume increased to $95 million from $92.4 million, but earnings fell from $6.8 million ($2.81) to $5.2 million ($2.10).
Hoffman warned that business could worsen in the months ahead and said Woodies already has reduced its inventories and tightened control over expenses.
Losses by its Wrangler Wranch jeans shop seriously depressed 1979 earnings, Drug Fair Inc. said yesterday.
Net income fell 53 percent from $1.59 million (95 cents a share) in 1978 to $754,000 (45 cents) last year.
The net income was after a write-off of $1,077,000 for the discontinued jean shops, which lost $126,000 the previous year.
The write-off, which should include all costs of closing the Wrangler Wranch stores, amounted to 64 cents a share, compared with operating losses of 7 cents a share by the chain last year.
Drug Fair's sales for the year climbed 7.5 percent to $266 million from $247 million and were up 6.4 percent, to $75.5 million from $70.9 million for the fourth quarter ended Jan. 26.
Net income for the quarter fell to $915,000 (55 cents) from $1.02 million (60 cents) after deducting a loss of $915,000 (64 cents) for Active Casuals.
Manor Care Inc. reported its profits almost tripled in the first nine months of its fiscal year, but most of the gain came from the sale of its stock in Hillhaven Corp.
Manor Care reported earnings for the three quarters ended Feb. 29 of $5.58 million ($2.30 a share) compared with $1.90 million (68 cents) in the same period a year ago.
The profits included an extraordinary gain of more than $3 million ($1.27) from sale of Manor Care's Hillhaven stock.
The company, which runs nursing homes and other health care facilities, said revenues for the nine months increased to $39.3 million from $34.5 million, and climbed to $13.5 million from $12 million for the third quarter.
Third-quarter profits fell to $654,000 (27 cents) from $1.05 million (37 cents) because Manor Care no longer got any income from the Hillhaven stock it sold.