National Lumber Ends Slide

National Lumber & Supply, a home-improvement retailer competing in a crowded Southern California market, has ended a two-year slide that included a $2.4-million loss a year ago.

The Fountain Valley-based company reported Tuesday net income of $228,758 for fiscal 1988 ended Jan. 31. However, the company’s return to profitability for fiscal 1988 was aided by a change in accounting principles by the Fair Accounting Standards Board that added $250,000 in earnings to the bottom line.

Without the change, National Lumber would have reported a loss of $21,242 for fiscal 1988, still a significant improvement over fiscal 1987’s $2.4-million loss.

National Lumber attributed its improved performance to cost-cutting measures and a commitment to its Cheap Chicken and Shorty advertising characters to promote value at National Lumber’s 20 stores in five Southern California counties.

“After two years of losses, we are now able to report some positive numbers,” National Lumber President Melvin Jaffee said in a prepared statement. “This is a small but important step on the road to increased profitability.”

National Lumber’s revenues were up 6% to $158.8 million for the year, from $150 million for fiscal 1987.

For the fourth quarter, typically National Lumber’s weakest, the company had a net loss of $229,432, compared to a loss of $2 million for the year-earlier period. Under the old accounting rules, the loss would have totaled $479,432.

Revenues for the quarter were down 3% to $37.9 million, compared to $39 million a year earlier.

“We reduced overhead, boosted same-store sales and the company turned around,” said V.J. Carnevale, National Lumber’s vice president of finance. Carnevale said National Lumber’s gross margins on sales increased to 30% by the end of January, compared to 28.6% a year ago.

But National Lumber is expected to have a difficult time continuing its recent success in Southern California’s do-it-yourself market, the most competitive in the nation, according to Ward P. Lindenmayer, a retail analyst at Sutro & Co., a San Francisco brokerage firm.

Among the competitors are Builders Square, owned by K mart; HomeClub, a Fullerton-based subsidiary of Zayre; and Builders Emporium, owned by Santa Monica-based Wickes, which last year operated 98 stores in Southern California and 122 outlets nationwide.

Although National Lumber’s performance improved last year, large companies control the lion’s share of the Southern California market. And their strength is expected to continue to increase, Lindenmayer said.

“The large chains will continue to beat up small ones like National Lumber with their marketing and buying power and smarter management,” he said.

National Lumber’s stock closed up 12.5 cents to $3 per share Tuesday in over-the-counter trading.