GREAT FALLS, Mont. -- Buttrey Food & Drug Stores Co. here reported increased earnings and decreased sales for the second quarter ended July 30.
lf included an extraordinary charge.)
Sales for the quarter fell 6.9% to $104.2 million and 7.5% for the half to $202.4 million. Same-store sales declined 5.5% for the quarter and 6.2% for the half.
Excluding six Washington stores the company sold in July to Associated Grocers, Seattle, same-store sales fell 4.5% for the quarter and 5.2% for the 26 weeks. The six stores generated volume of $64.3 million.
The company attributed the overall sales decline for the quarter to the impact of competitive new-store openings and remodelings; its strategy to reduce prices in certain food categories, and limited inflation.
The company said the sale of the six Washington stores will result in a pretax gain of about $4 million that will be included in third-quarter results. However, it said it anticipates a negative earnings impact from the contribution those stores make to fixed expenses. Buttrey now has 38 stores.
Cash flow increased during the quarter to $5.45 million, or 5.2% of sales, compared with $5.41 million, or 4.8%. The company attributed the increase to reductions in operating expenses, primarily to reductions in store labor and corporate administration.
For the half, cash flow fell to $9.7 million, or 4.8% of sales, compared with $10.7 million, or 4.9% a year ago.
Jonathan H. Ziegler, a securities analyst with Salomon Bros., New York, said, "The company is placing less emphasis on general merchandise to minimize competitive overlap with Wal-Mart and other general merchandise rivals. As a result, Buttrey's markup is reduced at the floor level but is offset by improved inventory turns."
Earnings were enhanced, he noted, by an improved product mix generated by promotional activity, as well as improved distribution center efficiency, which helped boost margins.
