National Lumber Earnings Fall 46% : Decline Attributed to Ambitious Expansion Program
Costs of implementing an ambitious expansion program contributed to a 46% decline in first-quarter earnings for National Lumber & Supply Inc., according to the president of the Fountain Valley company, operator of a chain of Southern California home improvement centers.
Melvin Jaffee, National Lumber president and chief executive, said Wednesday that for the quarter ended April 30, the company earned $176,791, down from $327,650 in the same quarter of 1984. During the intervening year, he said, the company opened three stores in Culver City, Covina and Ontario, increasing the number of its retail outlets to 15. National plans to open four more stores this year, he said.
Sales at the stores opened in the last year boosted the company’s first-quarter revenue 9% to $31.2 million from $28.6 million in the year-earlier period, Jaffee said. But sales per square foot, he said, remained flat because of what he considers to be a temporary slowdown in the economy.
In addition, Jaffee said, National Lumber is facing increased competition from the entry of discount warehouse home improvement firms such as Home Depot and HomeClub into the Southern California market.
He said that National Lumber’s prices still are low enough to match those of the competition but that the company has begun to stock its stores with more merchandise to keep from losing customers to the warehouse stores.
Jaffee said, however, that National Lumber will keep its department store style of displaying goods rather than adopting the warehouse marketing approach.
“About 50% of our customers are female shoppers, and so we need to present a better image,” he said. “I don’t think they like looking at boxes and digging through merchandise to find what they want.”
Jaffee said National Lumber intends to continue its expansion plans by opening four more stores within the next five months. A 67,000-square-foot store--the largest in the National Lumber chain--is scheduled to open next week in Fullerton. Stores will be added in Fontana, San Bernardino and Encinitas by November.
In addition, he said, the company has embarked on a $3-million project to computerize more of its operations.