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HomeBase modifies House2Home rollout

IRVINE, CA -The initial rollout plan of the House2Home concept has been scaled back from the original 67 stores by the end of November, to 42 stores by the end of July.

"Although sales at the five House2Home test stores have remained positive, we are beginning to see the potential impact that macro-economic conditions can have on certain aspects of our business," said Herbert Zarkin, chairman, president and ceo of House2Home's parent company, HomeBase. "For example, diminished consumer confidence has caused us to question our entry into colder climate markets, where the outdoor living category of the House2Home concept has yet to be tested. In addition, an increasingly tight credit market can make it more difficult for certain of our vendors and business partners to meet the demands of a rapid, large-scale expansion."

The board of directors approved the new direction last week, and the company expects to break even or return to profitability by the third quarter of this year instead of the fourth quarter, as previously planned.

"We believe a more modest launch of the House2Home concept is the right decision at this time, enabling us to preserve significant upside potential while minimizing the downside risk," said Zarkin.

Under the revised schedule, the company will not convert any of the 26 remaining HomeBase stores, which it had planned to do during phases six through eight of its eight-phase conversion process. The 26 stores, located throughout the Pacific Northwest, the Rockies and El Paso, TX, closed last week and will undergo an 11-week liquidation process, upon which the stores will close permanently.

In total, HomeBase will operate about 42 House2Home stores this year and close roughly 47 HomeBase stores.

Phases one through five have proceeded as scheduled, and 17 House2Home stores will open in the Los Angeles market this May.

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