HILLS TO CLOSE STORE
January 14, 1997
By Philana Patterson, Daily Press
The Hills Discount Chain announced Monday that it will
close the store it opened just 16 months ago in Riverdale Plaza Shopping Center.
The Canton, Mass. based company also said it would shut down seven other
stores: two in Richmond, four in North Carolina and one in Ohio.
Hills will continue operating stores in Newport News, Chesapeake, Norfolk and
Virginia Beach, but the 90 employees probably won’t be offered jobs at the
other locations, company officials said.
Hills, which has 165 stores, said the eight locations had accumulated more than
$5 million in combined annual losses. ”I
don’t have specific details in regard to Hampton,” said William Friend,
Hills’ secretary and corporate counsel, “but there’s a lot of new
competition in the market. I think that’s it as much as anything.”
Friend said that Hills has not decided when the Hampton store will close. But it
will likely close in late March or early April.
Still vacant 9 years later.
The store faces direct competition from Target, which opened in July, and
Wal-Mart, which expanded into a super-center in October. Both of those stores
are within a quarter-mile of Hills.
Company spokeswoman Kathleen Obert said the stores targeted for closure was part
of a Southern expansion strategy initiated by former Chief Executive Officer
Mike Bozic.
He planned to move Hills into the Mid-Atlantic region with 12 new stores a year,
but Gregory Raven slowed the strategy to a near standstill when he took over as
CEO last February. The chain only opened one new store in Pennsylvania.
Because fewer Mid-Atlantic stores opened than originally planned, Obert said,
the company didn’t get as much bang for its advertising buck.
”Whether you have three stores or 30 stores in a market, the ad costs are the
same,” she said.
Friend said the company will keep its four other Hampton Roads stores open
because the locations are performing well. Other Virginia stores that will
remain open are in Danville, Lynchburg, Christiansburg and two in Roanoke.
”Like many, many regional discount department stores, they have been unable to
compete effectively against major discounters like Wal-Mart and Target,” said
retail analyst Kenneth Gassman of Davenport & Co. of Virginia.
The national chains have an easier time than regional
discounters; he said because they have more buying power and can spread
distribution and advertising expenses over a greater number of stores.
However, Monday’s announcement probably doesn’t mean Hills, which emerged
from Chapter 11 in 1993, is headed for bankruptcy court again, said Scott &
Stringfellow retail analyst Cody McGarraugh.
”I tend to think their concept is a healthy one,” he said, “I’d be
surprised to see them in a bad situation---but stranger things have happened.”
Hills’ major problem in the Mid-Atlantic has been locations, McGarraugh said.
The firm suffered in Richmond, for example, because discounters such as T.J.
Maxx and Stein Mart are strong there. The company also has more than $280
million in long term debt that it needs to be sure it can service, he said.
Tina Drag, heading into the Hampton store Monday afternoon,
said she would miss Hills. A Pennsylvania native, she has been a life long Hills
shopper, and visits the Hampton store several times a month, mostly for her
4-year old daughter, Roxanne.
”It’s convenient, close and they have just about everything for a kid
you’d want at reasonable prices,” she said.
Riverdale Plaza Properties, which runs the shopping center, also will miss the
store. Along with Super Fresh, and Office Depot, Hills is a major anchor and
occupies a prime position in the middle of the center.
(Thanks to Anita Rose for sending in article and photos.)