PORTLAND, Ore. -- Fred Meyer Inc. here reported record sales and earnings for the fourth quarter ended Jan. 29.
Same-store sales rose 1.6% in the quarter. The same-store increase for food sales was 2.2% and for nonfood it was a 1.2% increase, the company said.
For the year, sales increased 4.4% to $2.98 billion at the 125-store chain. Same-store sales rose 2.4% for the year, which includes a 3.4% increase in comparable food sales.
Year-end net increased 12.8% to $68.3 million, or $2.41 per share. An accounting change and three accounting adjustments reduced the recent fiscal year's earnings by $2.6 million, or 9 cents per share.
Robert G. Miller, chairman and chief executive officer, said the fourth-quarter results were pleasing "even though our sales were affected by continued slow apparel sales and the impact of an economic slowdown in the Seattle area."
The company continued to exceed its objectives in terms of lowering operating expenses as a percentage of sales, Miller said. Operating and administrative expenses declined 87 basis points in the fourth quarter to 24.35% of sales. For the full year, Fred Meyer trimmed operating expenses by 78 basis points to 25.57% of sales.
Miller said the company is on schedule to open five new stores and complete at least eight major remodels in fiscal 1994. In six of the stores scheduled to be remodeled food departments are being added to previously nonfood stores.
Jonathan Ziegler, a securities analyst at Salomon Bros., New York, said Fred Meyer's year-end results (before a 9-cent charge for an accounting change) exceeded his earnings-per-share estimate of $2.46 by 4 cents per share.
The food-business side of Fred Meyer's operations was fine in 1993 and in the fourth quarter, but apparel showed soft sales growth through much of the year, he said. The food side is benefitting from aggressive pricing and private label sales, he said.
"Fred Meyer has developed a gangbusters private-label strategy," Ziegler said. The company's three-tier private-label program includes premium President's Choice products, mid-range Fred Meyer items and the lower-end FMV label. Private label grew from 12% of sales in 1992 to 19% in 1993.
Ziegler said the lower expense percentage is a result of the combination of improved productivity, through the use of new technology, and in-store merchandising programs that are driving sales.