50-YEAR-OLD HOUSE OF FABRICS VANISHES IN MERGER.

Byline: Deborah Adamson Daily News Staff Writer

Five words uttered in a few seconds officially sealed the fate of a Southland fabrics retailer that has been around for half a century.

``The merger is now concluded,'' said Rock Hankin, chairman of House of Fabrics, in a special meeting of shareholders Tuesday at the company's headquarters in Sherman Oaks.

For $100 million, Fabri-Centers of America, the nation's largest fabrics and crafts retailer, bought 261 House of Fabrics stores in 27 states. The purchase price includes $25 million in cash and the assumption of $75 million of debt.

On Tuesday, House of Fabrics was delisted from trading on Nasdaq.

The corporate headquarters of House of Fabrics will close by Aug. 1 and most of the 150 people who work there will lose their jobs, the company said.

Hankin, a board member who was named chairman in 1996, will be leaving as well. Donald Richey, who was president and chief executive officer for a year, left last month.

Fabri-Centers, which is based in Hudson, Ohio, and operates stores under the names Cloth World, New York Fabrics, Jo-Ann Fabrics and Crafts, and Jo-Ann etc, will close 93 locations that overlap with House of Fabrics stores. Remaining House of Fabrics stores will be renamed Jo-Ann Fabrics and Crafts.

While Fabri-Centers officials did not specify which stores they plan to close, there is some overlap in the local area.

Both companies have stores in Glendale, Simi Valley and Lancaster. In addition, Cloth World and House of Fabrics share some vicinities. Cloth World has stores in Woodland Hills, Ventura and Thousand Oaks, while House of Fabrics operates branches in Canoga Park, North Hollywood, Reseda, Sherman Oaks, Northridge, Newbury Park, Oxnard and La Canada Flintridge.

Twelve to 15 employees will lose their jobs at each of the stores that are closed, but many workers likely will be placed in other locations, said Brian Carney, chief financial officer of Fabri-Centers.

Incorporated in 1946, House of Fabrics grew to become a household name in the Southland. But like many retailers, the company expanded too rapidly. The recession and a trend away from home sewing hit profits hard.

From 1995 to 1997, House of Fabrics closed 384 stores to end up with 261 locations. It filed for Chapter 11 protection from creditors in 1994 and emerged as a reorganized company two years later.

Sales dropped from $557 million in 1993 to about $240 million in fiscal 1998.

Lack of time and the availability of inexpensive ready-made clothes drove many women away from sewing, according to the Hobby Industry Association.

The business moved toward crafts and home-decorating projects, as well as some easy-to-sew clothing. The hot trend now is decorating scrapbooks.

Many retailers that once mainly sold fabrics started to move toward crafts as well. During its restructuring, House of Fabrics made the shift.

However, Fabri-Centers, which began as a fabric store in Cleveland shortly after World War II, made the transition more successfully.

Fabri-Centers not only survived the industry consolidation, but also took advantage of the slump to acquire its rivals, such as Cloth World. In fiscal 1998, the company reported annual sales of $975 million from its 903 stores nationwide.

With its purchase of House of Fabrics, Fabri-Centers will end up with 1,073 locations from coast to coast.

The corporate headquarters of House of Fabrics will close by Aug. 1 and most of the 150 peope who work there will lose their jobs, the company said.