VERNON, Calif. -- Smart & Final here said sales rose for the second quarter and first half ended June 18, but earnings decreased in both periods due to higher than anticipated start-up costs at its new northern California distribution facility.
For the 12-week quarter, the company reported net income of $3.1 million, a 38.6% drop. Net income for the first half was $6.6 million, a 14% decrease. This year's earnings included a net charge of $2.1 million related to the April opening of the new distribution center in Stockton, Calif.
Second-quarter sales increased 26.1% to $273.4 million -- including $218.1 million contributed by the company's 150 nonmembership warehouse stores and $55.3 million from its food-service distribution segment.
For the half-year, sales were up 26.4% to $525.6 million, including store volume of $408.3 million and food-service distribution volume of $117.3 million.
Same-store sales increased 5.4% in the second quarter and 3% for the first half.
Roger M. Laverty 3rd, president and chief executive officer, said, "The costs associated with the start-up are behind us. The basic business continues to be very solid and we expect a return to our historical profit growth rates in the second half of the year."
Smart & Final said an aggressive radio advertising program contributed to sales growth during the quarter. The company also said that Henry Lee Co., the Florida food-service distributor it acquired last November, achieved record second-quarter sales of $40 million.
