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Conversion Charges Bring HomeBase's Loss

February 28, 2001

HomeBase Inc., which is switching from a home-improvement chain to a home-furnishings retailer, posted a fourth-quarter net loss of $60.4 million, or $1.61 a share, which included a $55-million pretax charge for liquidating inventory at 84 stores and a $15-million write-down of fixed assets.

The Irvine company announced in December that it plans to convert all of its home-improvement stores to House2Home stores.

For the fourth quarter a year ago, HomeBase lost $2 million, or 5 cents a share.

Sales for the quarter ended Jan. 27 were up 2% to $332.4 million.

For the year, the company reported a net loss of $70.4 million, or $1.87 a share, contrasted with a profit of $12.6 million, or 33 cents a share, for the prior year. Sales were down 7% to $1.4 billion.

During the quarter, the company began liquidation sales at 39 HomeBase stores. To date, the company has completed liquidation sales at 31 stores, has liquidation sales under way at another 16 stores and has 24 stores in various stages of construction. Seventeen of these stores are scheduled to open as House2Home stores in May.

Quarterly sales at five House2Home stores, which originally established to test the new concept, totaled $20.5 million, or an average of $4.1 million per store, slightly ahead of the company's expectations for the quarter, HomeBase said.

The results were announced after the close of regular trading hours for U.S. markets. The stock closed at $2.57 a share, off 4 cents, on the New York Stock Exchange.

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