HomeBase Says Quarter’s Loss Will Exceed Estimates

HomeBase Inc. said Monday it expects higher losses than anticipated in the second quarter as it moves to transform itself into a home furnishings chain.

The costs of converting its stores to a new House2Home format, combined with a slowing economy, have driven up the Irvine-based company’s losses to about $1 a share for the second quarter from previous estimates of a loss of 80 cents a share, HomeBase said.

Although sales were strong during the home-decorating stores’ grand openings, they failed to match expectations afterward, Chairman and Chief Executive Herbert Zarkin said in a statement. He attributed the disappointing sales to a sluggish economy.

In the second quarter a year ago, HomeBase earned $2.8 million, or 7 cents a share, excluding costs, on sales of $407.1 million.

HomeBase’s stock on Monday fell 42 cents, or about 15%, to $2.32 on the New York Stock Exchange.

The company is operating 42 House2Home stores in California, Arizona and Nevada, as it exits the home-improvement market, where it faced bigger competitors such as Home Depot Inc. and Lowe’s Cos.