WAYNE, N.J. -- Grand Union Holdings Corp., the indirect parent of Grand Union Co. here, reported improved operating cash flow and lower sales in its first quarter ended July 23.
The company reported a net loss of $25 million in the 16-week quarter, compared with a loss of $58.8 million in the year-ago period. Grand Union paid interest expense of about $59 million in the recent quarter.
Operating cash flow (earnings before interest, taxes and depreciation and amortization) improved to $60.1 million, or 8% of sales, in the first quarter. This compared with cash flow of $51 million, or 6.7% of sales. The year-ago total was reduced by about $8 million due to a 22-day strike in May 1993, the company said.
Sales for the quarter fell 1.8% to $748 million. Same-store sales declined 5.6%.
Grand Union, a 250-store chain, attributed the sales drop to several factors, including the continuing effect of work force reductions by several major employers in the company's northern region, competitive store openings in New York state and the increased emphasis on value-oriented products in its northern region.
Gary D. Hirsch, chairman, said the company is seeing improved sales in its New York region, which includes stores throughout metropolitan New York, New Jersey and Connecticut. However, a sluggish sales performance in its northern region -- New England and Upstate New York -- has prompted Grand Union to begin "a comprehensive program that includes more lower everyday prices, a broader assortment of lower-priced products and an emphasis on budget-oriented brands.
"The costs of implementing these programs will be in part absorbed by the savings associated with our previously announced corporate reorganization program," he said. Results in the northern region may improve in the second half of the year, he added.
Bob Lupo, a securities analyst with PaineWebber, New York, said the drop in first-quarter sales reflected not only the poor economy and competitive activity in Grand Union's northern region, "but also the fact that its stores there have not been positioned correctly on price and they are not as efficient as they could be."
Lupo said the company's decision to lower prices and add more private-label and generic lines was necessary to provide greater customer values and generate healthier profits.
