National Home Center sells Rogers store, Eyes Contractors

Retail Trends, Developments

National Home Centers Inc. of Springdale has agreed to sell its 200,000-SF Rogers store to Lowe’s Cos. Inc. for an undisclosed amount.

The move effectively gets National out of the big-box home retail business. After closing four large stores during the past six months, the Springdale-based home improvement and building supply company will have eight smaller stores left — all in Arkansas.

The company is abandoning large retail sales operations in favor of sales to builders and contractors. Retail sales, which had accounted for about 50 percent of National’s business, will now comprise 20 percent to 25 percent of sales, says Brent Hanby, CFO for the company.

“We’ve been better off from selling to contractors and professional builders,” Hanby says. “We’re more or less going back to how we started the company in 1968. We’re going to let Home Depot and Lowe’s [fight over the retail market]. They’ve announced a lot of aggressive expansion over the next few years.”

National opened its first major retail store with 40,000 SF in Springdale in 1983. In 1993, the company began opening stores that were closer to 150,000 SF in size. By then, the company had shifted to a sales mix of 50 percent retail and 50 percent to contractors and builders.

“That didn’t work as well for us,” Hanby says.

Between 1995 and 1997, National’s revenue has increased from $153.4 million to $177 million. But net income has gone from $1.5 million in 1995 to a loss of $3.1 million for the year that ended in January 1997. That decline is attributed to the increased competition.

Last summer, National Home Centers hired Arthur Andersen & Co. to help devise a business plan. The consultants recommended a sell-off of the large stores and a return to the original sales mix of 20 percent to 25 percent retail. Hanby says revenue will now be around $100 million per year.

As a result of the study, National now has about $20 million worth of property under contract, Hanby says. The company lost $13 million at the end of fiscal 1997, but $6.7 million of that was in one-time charges related to selling the stores.

The company lost $1.6 million, or 23 cents per share, in the first quarter of 1998. That’s nearly three times the loss National had at the same time a year ago.

The Rogers store opened in October 1995. The sale of that store includes 14.77 acres of land.

“It’s really a good deal for both companies,” Hanby says.

The Rogers stores employed about 140 people. Lowe’s plans to keep them on board and hire another 35 to 60 employees, Hanby says.

Besides the Rogers store, National has closed stores in Fayetteville, Conway and Little Rock.

“We feel good about what we’re doing to turn this company around,” Hanby says.

Superior Linen to Be Retail Center

Greg House, the major force behind the renovation of older buildings on on Fayetteville’s Dickson Street, has purchased the Superior Linen Service building just off Dickson at 326 N. West Ave.

House says he’ll renovate the 10,000-SF building to be used for retail, restaurant, office or apartment space. Construction should begin in August and be completed in six months.

“We’re just going to create the space and see who comes,” House says. “It’s the ‘Field of Dreams’ theory.”

House says he paid about $300,000 for the building. By the time renovation is completed, he’ll have $700,000 to $800,000 in the project.

“A lot of people want to be downtown but can’t pay the Dickson Street rents,” House says. “I think we can accommodate some of those folks.”

The building, at the corner of West Avenue and Watson Street, fronts those streets as well as the parking lot behind some of the more popular establishments on Dickson Street.

Superior Linen, which has been in business since 1985, is moving to a larger location in Springdale. The red brick building being vacated was apparently built in 1926, House says.

House renovated The Bakery Building on Dickson Street and is about to begin work on a 54,000-SF mixed-used complex in the 200 block of Dickson Street where Restaurant on the Corner and The Grill are currently located. The restaurants have the option of staying there or moving.

House financed The Bakery Building construction with a $1.7 million loan from McIlroy Bank & Trust. He says the 200-block complex will cost between $4 million and $5 million and should be completed by the year 2000.