BIRMINGHAM, Ala. -- Bruno's here said the higher costs of new stores and promotional expenses contributed to a 43.7% decline in earnings in the second quarter ended Jan. 1.
he lower earnings and the competitive environment, Bruno's said it will reduce capital expenditures in fiscal 1995 and instead focus on remodeling and expanding existing units.
"Our intent is to improve our overall financial results by more closely focusing on improving the performance of existing units, controlling our operating costs and reducing the current level of debt and related interest charges," said Ron Bruno, chairman and chief executive officer.
Bruno said the 256-store chain opened five new stores in the first half and expects to open six more by the end of the year. The company said it changed its corporate reporting structure so that regional sales teams are closer to the customers. The change "flattens our organizational structure" and gives lower-level managers more decision-making power, he said.
Debra Levin, a securities analyst at Morgan Stanley, New York, said second-quarter earnings were disappointing. Operating-profit margins declined as a result of both lower gross margins and higher operating expenses.
The increase in SGA was due to the chain's attempt to improve customer service and the overall sales increase was driven by increased promotional activity and a good holiday selling season.
