Furniture Chain To Shut Some Stores Northwest Shops Excluded From Heilig-Meyers Cutback

Heilig-Meyers Co. will close about 60 stores and eliminate 400 employees as part of an effort to reduce costs and boost profits at its core furniture business.

The home-furnishings retailer said late Wednesday that it would take a $134 million pre-tax charge over the third and fourth quarters to cover the expenses associated with restructuring.

Wall Street barely reacted to the news, although analysts said it will help the company control expenses. Heilig-Meyers stock rose 25 cents to $12.93-3/4 Thursday on the New York Stock Exchange.

“This is a very healthy move for them,” said Wallace W. Epperson Jr., a furniture analyst with Mann, Armistead and Epperson Ltd.

The restructuring will focus on its Heilig-Meyers furniture division, which generates 63 percent of the company’s total revenues.

About 60 stores will be closed early next year in large markets like Atlanta, Cleveland and Milwaukee, where the company’s small-town format has not been successful.

It will relocate another 20 or 30 stores to higher-traffic areas. And it will initiate a new merchandising and advertising strategy that will differentiate between larger and smaller markets.

No stores in Washington, Idaho or Montana will be affected, said regional Supervisor Ted Roberts.

Heilig-Meyers also will slow its expansion plans. In the last four years, between 45 and 100 stores were opened annually. Heilig-Meyers acquired the Spokane-based Self Service Furniture chain of 23 stores in October 1996 and opened under the Heilig-Meyers name in August.

Nearly 400 jobs will be cut companywide, including about 80 at corporate headquarters. The company employs 22,000 workers.

Heilig will also change its credit-card operations, looking for better ways to predict potential bad-risk customers. About 85 percent of Heilig-Meyers merchandise is bought on credit.

The company will put aside $50 million to increase a reserve for customers who file for bankruptcy or fall behind on payments.

Also Wednesday, the company reported a third-quarter loss of $49.1 million, or 85 cents a share, compared with earnings of $9.5 million, or 19 cents a share, a year ago.

For the first nine months of the year, Heilig-Meyers lost $26.1 million, or 46 cents a share, compared with year-ago earnings of $29.61 million, or 60 cents a share.

Heilig-Meyers Co. operates 1,190 stores, with 864 as its Heilig-Meyers core furniture stores.

, DataTimes The following fields overflowed: CREDIT = Associated Press Staff writer Bert Caldwell contributed to this report.