National Home Centers Sees Income Drop

For the third quarter of 2000, net income was down 80 percent and net sales 16 percent at National Home Centers Inc. of Springdale.

Net income dropped from $347,000 in the quarter ended Oct. 31, 1999, to $68,000 in the same three months of 2000. Net sales decreased to $25.2 million, compared with $30.0 million in the third quarter a year ago.

Comparable store sales, for stores open more than one year, decreased 16 percent. EBITDA (earnings before interest, taxes, depreciation and amortization) for the third quarter of fiscal 2000 was $753,000, compared with $991,000 in the third quarter last year.

The company finished the quarter operating the same eight stores that it operated a year ago. For the third quarter, National’s revenues consisted of 81 percent to professional contractors and 19 percent to retail customers, compared with 83 percent to professional contractors and 17 percent to retail customers in the third quarter last year. Over the past few years, National has been shifting away from retail to refocus on contractor sales.

“We are pleased to report our seventh consecutive profitable quarter,” said Dwain A. Newman, chairman and CEO. “Our comparable store sales were lower because of severe lumber deflation, which is affecting everyone in the industry. Sales prices and costs for our two largest sales categories, lumber and plywood, were down as much as 40 percent during the quarter, which in turn brought in less sales dollars, even though, in many cases, we are selling the same or higher quantity of items.

“Most of these commodities are at their lowest prices in over six years,” Newman said. “Rising interest rates and significant competition contributed to the softer demand for building material products as well. We also had additional, large-project business this time last year, so we knew we would be up against tough comparable sales. We remain cautiously optimistic regarding the remainder of the year.”

National Home Centers is a supplier of home improvement products and building materials to retail customers and professional contractors.