GREAT FALLS, Mont. -- Buttrey Food & Drug Stores here will continue to seek acquisition opportunities, Joseph H. Fernandez, president and chief executive officer, told shareholders at the chain's annual meeting here.
The company has acquired a store in Cheyenne, Wyo., which will be its third store there "and will help us towards our goal of dominance in the markets we serve," he said. Buttrey is slated to take over the store from Dan's Supermarkets, Bismarck, N.D., on June 10. "During 1996, we expect to continue to engage in discussions with other chain and independent operators concerning acquiring their food and/or drug stores that may fit our network, and we will step up our search for locations on which to build new stores," Fernandez said. That effort, he noted, could include small stores, based on Buttrey's positive experience opening a combination store at a 25,000-square-foot location in Butte, Mont. "That store makes efficient use of a small existing building. Its success allows us to consider opportunities for smaller stores in less expensive existing facilities in other markets," he explained. A day after the meeting, Buttrey reported increased sales and earnings for the first quarter ended May 4. Sales for the 13-week quarter rose 1.1% to $88.1 million, while same-store sales increased 0.3%, despite the loss of sales during remodeling of the chain's Great Falls store, its highest-volume location. Net income for the quarter rose 291% to $731,000, which the company attributed to improved operating income and reduced interest expense. Net earnings included a gain of $153,000, or 2 cents per share, from asset sales and an extraordinary charge of $51,000, or 1 cent per share, from early retirement of debt.
Fernandez said at the meeting that fourth-quarter earnings were the chain's best in more than three years and sales trends at the end of fiscal 1995 were "the best we have seen in four years, despite facing new competition in several markets and an aggressive remodeling program by competitors." However, he said the company faces a difficult sales environment in 1996. "There will be additional store openings and remodels from competitors, and we project a sluggish economic environment continuing in many trade areas. "To combat this, we will continue to look for ways to reduce costs by further implementation of new systems and methods of operation. We will continue to seek to improve the sales performance of our existing stores by even better execution of our marketing strategy, and we will look to invest in growing the business more quickly than in recent years." Fernandez said Buttrey is pleased with the results from its conversion of a Great Falls store in November to the Buttrey Big Fresh format. The concept emphasizes perishables, including a food court with sit-down eating areas, and features a drive-through pharmacy plus The Savings Stack, an entire aisle of special offers on groceries customers buy most often. "We are proud of Buttrey Big Fresh and look to expand our use of this format," Fernandez said. He noted that a second Great Falls store already has been converted to the format, with plans for additional conversions at stores in Lewistown, Mont.