WAYNE, N.J. -- Grand Union Co. here said its MASTERS (Maximize All Space, Totally Expand the Right Stuff) store-upgrade program is on course, despite higher-than-expected costs.
er, we continued the implementation of our strategic plan by installing equipment for our 'Best Take-Out Restaurant in Town' program in many additional stores and by testing our 'Fresh at Five' program in 25 stores," said Joseph J. McCaig, president and chief executive officer. "The growing, positive customer response to our sales-building programs strongly reinforces our determination to continue to reduce costs the customer doesn't see and reinvest those savings into areas the customer sees every day."
Second-quarter results, reported last month, reflected a $40 million sale of convertible preferred stock, which fueled the recent spate of MASTERS projects, Grand Union officials noted. The sale is the first step of a previously announced plan to sell $100 million in preferred stock to finance an upgrade of the company's retail base. The move will transfer majority control of the chain to an affiliate of Shamrock Capital Advisors and affiliates of GE Investments.
"The accelerated capital spending made possible by the sale of preferred stock is already under way, with our primary emphasis being on MASTERS renovations," McCaig explained.
Early last month, Grand Union completed a MASTERS renovation at its Berkeley Heights, N.J., store; began work on three other MASTERS projects slated to be completed this month, and opened a replacement unit in Niskayuna, N.Y., he said. "By the end of this fiscal year, we expect to have opened one new store, two replacement stores, 10 MASTERS renovations and one new store under construction."
Capital spending, excluding capital leases other than real estate leases, totaled about $20 million through the second quarter and is projected to reach between $65 million and $70 million for the year, according to McCaig.
The MASTERS projects and an aggressive price campaign, called "More Lower Prices," helped lift Grand Union's second-quarter and first-half results.
