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HomeBase DIY exit nets $60M loss

IRVINE, CA -Paying the price for quitting the home improvement business, and transforming its operations into a new House2Home format, HomeBase Inc. recorded a fourth-quarter loss of $60.5 million, compared with a modest year-before loss of $2.0 million.

Pushing the retailer deep into the red ink was a $55 million pre-tax charge for the liquidation of inventory at all of its remaining 84 HomeBase stores and a $15 million write-down of fixed assets.

Sales at the West Coast retailer ticked up by 1.6 percent, to $332.4 million from $327.1 million last year. Same-store sales at the HomeBase stores not in liquidation plunged by 17.9 percent. During the closing quarter, the company began liquidation sales at 39 HomeBase units, and to date the company has completed sales at 31 stores.

Chalking up some good news, the company said that combined fourth-quarter sales for the five House2Home flagship stores totaled $20.5 million, or an average of $4.1 million per store, slightly ahead of expectations. And that, the company emphasized, was for a quarter expected to be seasonally somewhat slower than the third or fourth quarters. Average sales for the House2Home stores for the 21-week period between the September 2000 opening and the end of the fiscal year totaled $7 million per store, with an average ticket of just over $60 and an average gross product margin of 39.6 percent.

HomeBase Inc.


Qtr. 1/27 (x000) 2001 2000 %CHG

Sales

$332,413

$327,148

1.6

Oper. income (EBIT)

(94,057)

(4,584)

-

Net income

(60,425)a

(2,031)a

-

Per share (diluted)

(1.61)

(0.05)

-

Average gross margin

(4.5%)

20.5%

-

SG & A expenses

23.7%

21.9%

-

12 months

2001

2000

%CHG

Sales

1,439,598

1,525,275

-5.6

Oper. income (EBIT)

(107,829)

20,627

-

Net income

(70,404)b

(12,628)b

-

Per share (diluted)

(1.87)

0.33

-

Average gross margin

14.2%

21.6%

-

SG & A expenses

21.7%

20.0%

-


( ): Denotes loss

a-Results in the fourth quarter include an income-tax benefit of $60.4 million, compared with a prior-year benefit of $2.0 million. The prior-year also included a $1.8 million gain on the early retirement of debt. Excluding the tax benefit, the retailer posted a loss of $95.9 million vs. a $6.1 million deficit last year.

b-Results for the 12 months include a tax benefit of $41.7 million vs. a prior-year tax payment of $6.4 million; and a $576 million gain on the early retirement of debt vs. a prior-year gain of $1.8 million.

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