SYDNEY, Australia (FNS) -- Franklins Holdings Ltd. here said it is determined to pursue its commitment to transform its supermarkets from its traditional grocery operation to a fresh-food discount outlet, despite a steep decline in company earnings in the year just ended.
resh produce, meat and deli items, will be carried out over the next two years.
Currently, fewer than 100 of the chain's store are of the No Frills variety.
The company reported an operating profit of only $185,000 for the year, against the previous year's $4 million, and it expects profit to grow slightly this year.
Managing director Ian Cornell, who came over from rival Woolworths, Australia's largest supermarket chain, also based here, said "confidence in the direction we have taken has been buoyed by news that our Fresh sales increased from 13.5% to 15.2% during the past 12 months."
Total sales rose 3.5% to $2.6 billion, compared to the 8% reported by Woolworths.
Analysts noted Franklins had experienced two years of strong profit growth in the face of stiff competition from its two rivals, Woolworths and Victoria-based Coles Meyer Ltd., Australia's largest retailer, but that the conversion to fresh food had cost it too much.
In the first half of the year, Franklins had recorded a profit of about $6.75 million, but this was all but wiped out in the second half because of decreasing sales.
According to industry sources, Franklins' turnaround would take some time, and no significant improvement in cash operating profit could be expected before 2001.
The company said it has initiated cost-cutting measures that it hopes will reduce operating costs by over $7 million a year.