House2Home Moving to Cut Swollen Inventory

House2Home Inc., besieged by a sharp drop in business since the Sept. 11 terrorist attacks, said Tuesday that it will turn away deliveries of new merchandise for as long as three weeks to cut its inventory.

“We’re at capacity now, and we don’t want to take on more inventory, given that sales have slowed,” said Michele Feller, spokeswoman for the Irvine chain of home decorating stores.

The company announced last week that sales had fallen 25% to 30% after the attacks and said it had hired an investment banking firm to explore various “strategic and financial alternatives” regarding its future.

Still, the announcement late Tuesday was a surprise, said Brett Hendrickson, an analyst with B. Riley & Co.

Hendrickson said many companies are trimming or delaying orders but he knows of no others making an “across-the-board stoppage like this.”

House2Home--formerly known as HomeBase Inc.--recently overhauled its business, closing its home improvement stores and reopening 42 of them under the new home decorating concept. The company lost $37.6 million in the second quarter, bearing the expense of the conversion and the disappointing sales.

The company said in August that sales were strong during the House2Home grand openings but failed to match expectations thereafter.

The announcement came after the stock market closed. House2Home shares were unchanged at 45 cents on the New York Stock Exchange.