PORTLAND, Ore. -- Fred Meyer Inc. here said a series of strikes during the second half of the year reduced earnings and lowered same-store sales for the year and fourth quarter ended Jan. 28. Net income fell 89.5% to $7.2 million for the year and 71.5% to $8.6 million for the 12-week quarter. Sales rose 5% for the year to $3.13 billion and 3% for the quarter to $832 million, while same-store sales dropped 2% for the year and 2.5% for the quarter. Comparable food sales fell 3% for the year and 2.4% for the quarter, while comparable nonfood sales fell 1.4% for the year and 2.6% for the quarter. As reported, the labor disputes included an 88-day retail clerks strike here and in Vancouver, Wash., that targeted 26 Fred Meyer stores; plus separate strikes at the chain's Clackamas, Ore., distribution center and trucking operations and at its central bakery, dairy and main office. All disputes were settled early in the fourth quarter. Richard G. Miller, chairman and chief executive officer, said the strikes cost the company approximately $60 million in after-tax earnings for 1994. "While we kept expenses in line, gross margins suffered from the strikes' effect and the promotional Christmas period," he said. "While our sales are recovering, we now believe recovery will not be completed until at earliest the end of the first quarter of 1995."
Jonathan Ziegler, a securities analyst with Salomon Bros., New York, said the strike resulted in a 37% drop in Fred Meyer's Portland area sales, "and sales there are still down 5%, so the recovery is taking longer than the company had anticipated," he said. However, Fred Meyer's selling, general and administrative expenses fell as a percent of sales -- from 24.35% to 24.28% in the year just ended -- "which shows just how strong management has been in preparing for the strike and cutting expenses," he said. Fred Meyer Inc. operates 131 stores in Oregon, Washington, Utah, Alaska, Idaho, California and Montana, 86 of which include food departments.