LANDOVER, Md. -- Increased store expenses at Giant Food here -- resulting from the aftereffects of a five-week Teamsters strike last winter -- resulted in a decline of 42.1% in net earnings for the first quarter ended May 17.
esults were affected by several factors related to the strike in December and January, including higher inventory levels resulting from the chain's buildup of inventories to keep the stores operating.
"The higher inventory levels reduced the amount of cash available for investment, negatively impacting earnings," Pete L. Manos, chairman, president and chief executive officer, said.
He said first-quarter results were also affected by the temporary supply agreements Giant made during the strike, producing a higher cost of goods and lower margins during the first quarter as those costs were absorbed.
To boost sales, the chain said it offered two separate weeks of promotions during the quarter in which 80 items were offered at half-price. It also said everyday retails were lowered to rebuild business.
The company said it plans to expand its freestanding drug store division, which currently has three units, by opening 10 to 20 units over the next three years.
During the quarter Giant said it opened a new combination store in Elkridge, Md., with 10 additional stores scheduled for the balance of the year.
