OKLAHOMA CITY -- Homeland Stores here said last week the addition of eight acquired stores helped boost sales for the second quarter and first half ended June 17.
Operating cash flow was flat, declining less than 1% to $5.2 million for the quarter and rising 0.03% to $10.6 million for the half. The company said net income, excluding amortization of excess reorganization value, dropped 0.9% to $33,000 for the quarter and 0.6% to $447,000 for the half.
David B. Clark, president and chief executive officer, said the company's sales growth was attributable to an increase in its store base to 85, from 77 a year ago, which was partially offset by the closing of one existing store during the quarter. "[However], our financial results did not meet our targets for a combination of reasons," Clark said.
"First, net sales reflected the ongoing competitive environment in which we operate, which resulted in several new competitive store openings in our markets during the quarter. In addition, due to a labor dispute between our primary supplier, Associated Wholesale Grocers [Kansas City, Kan.] and the Teamsters union, approximately 30 of our stores were subjected to a leaflet campaign over a two-week period during the quarter."
Clark said the drop in same-store sales resulted in greater margin pressure at a time of increased expenses from Homeland's acquisition of four Baker's Supermarkets, including promotional and reopening expenses. He also said operating cash flow was affected by anticipation of reduced patronage rebates from AWG as a result of the labor dispute.
He said he expects better second-half results. "We believe improving operations at our purchased stores will contribute to greater net sales and stronger cash flow and profit margins," Clark explained