HomeBase closing LV store, exiting home improvements

Tuesday, Dec. 5, 2000 | 11:10 a.m.

HomeBase Inc. has concluded from a market test that involved two Las Vegas stores that it would fare better as a home decorating retailer than a home-improvement warehouse store.

That means a HomeBase store with 116 employees at Charleston Boulevard and Spencer Street is closing. It will be among 22 stores that will close nationwide as the company moves to convert 62 others to House2Home stores.

The company's House2Home stores in the Las Vegas area -- at 2260 S. Rainbow Blvd. and 570 N. Stephanie St. in Henderson -- were converted in September as part of a five-store test announced in April.

"Collectively, the sales at those stores have exceeded our expectations," said Michele Feller, investment relations director for Irvine, Calif.-based HomeBase. "The profit margin in those stores has been in the 40 percent range and the average ticket has been about $60 or so, which is a great number. In general and in total, the five-store pilot program has given us the confidence to move forward."

Feller said the five stores were viewed as exemplary of many of the company's stores targeted for conversion. The Las Vegas area was viewed by the company as an explosive growth market, with the Henderson store seen as an example of a suburban market.

And only in the Las Vegas market, the company also experimented with television advertising and Feller said local spots aired here accomplished company goals.

Employees of the Las Vegas store that is closing were notified when they arrived to work this morning.

Under the company's chainwide conversion process, which began today, an inventory liquidation period scheduled to last about 11 weeks will end with the closure of 22 stores, including the one on East Charleston Boulevard. The local store was closed today and will reopen for liquidation sales Friday.

Feller said the 116 employees would be offered jobs at other House2Home stores, although the two local stores are fully staffed. Employees who don't get other jobs are eligible for severance packages. The company said the House2Home stores generally hire about 45 percent more employees than the HomeBase versions.

Feller said severance packages will be offered to employees who agree to stay through the liquidation period of the store. Details of the package were not disclosed. She said there was no indication yet how many employees would take the offer.

HomeBase's decision to get out of the home-improvement business will take it out of competition in a market dominated by warehouse players Home Depot Inc., Payless Cashways and Las Vegas newcomer Lowe's Companies Inc. Under the new style of store, House2Home hopes to establish its own niche, crossing into the domains locally dominated by HomePlace, the J.C. Penney Home Store and Linens 'N Things.

"This is a tremendously exciting day for our company as we commit to change our course for the future and embark upon a new beginning," said Herbert Zarkin, chairman, president and chief executive officer. "HomeBase has made a valiant effort to sustain its position in the fiercely competitive home improvement market.

"However, despite our best efforts, we do not foresee the pressures on the HomeBase business subsiding in the near term. Rather, they are likely to intensify as time goes on," he said.

"After careful deliberation and evaluation of the test store results, as well as consideration of a variety of alternatives, the board of directors is convinced that our new House2Home concept presents a clear and compelling opportunity for an effective and fast turnaround."

HomeBase Inc. stock was down 6 cents at $1.25 this morning. The company's 52-week low price of $1.12 was reported Nov. 22.