LONDON (FNS) -- Over the next few years, J. Sainsbury here plans to speed expansion at Shaw's Super Markets, East Bridgewater, Mass., company executives said during a press conference.
Shaw's is slated to open 11 stores this fiscal year, including its first two Vermont units. In Connecticut, which it entered last year, the chain may acquire some stores from Stop & Shop Cos., Quincy, Mass. Shaw's also will roll out its new larger stores, a 47,000-square-foot, fresh-oriented format launched last year. Seven such units are planned this year.
Last year, Shaw's opened 10 stores, including two bought from Stop & Shop and five in the larger format. It also bought eight Rhode Island stores from the liquidator of Almacs and will retain three of the units, with the rest to be sold or redeveloped, said Rosemary Thorne, Sainsbury's finance director. Shaw's now operates 100 stores in New England.
The press conference concluded with the release of fourth-quarter results. For the year ending March 11, Shaw's reported a 28.4% leap in operating profits to $80 million and a 10.5% rise in sales to $2.29 billion. That compares with operating profits of $62.3 million and sales of $2.08 billion in the previous fiscal year. Thorne said Shaw's "continues to go from strength to strength." Same-store sales rose 1.5% last year, she said. "The operating margin increased by 0.5%, reflecting continued development of private label, improved control of shrinkage and the implementation of a new buying category-management system."
Shaw's introduced more than 750 private-label products during the year, boosting private label to about 40% of total sales, Thorne said. Its operating margin, at 3.5%, is higher than when Sainsbury bought the chain, and the U.K. parent believes it can increase that margin 1% to match up with Shaw's rivals, she said.
Sainsbury is committed to U.S. growth, chairman David Sainsbury said at the release of the year-end results.
However, he noted, Sainsbury currently has no plans to acquire the remaining 50% of Giant Food, Landover, Md. There has been speculation that Sainsbury, which owns half of Giant's common stock and 16% of its nonvoting equity, would buy the shares owned by Israel Cohen, Giant's chairman and chief executive, who died in December. "It has always been our position that we will go ahead with our investment in Giant only if it gives us a real commercial opportunity to expand our business in the U.S.," Sainsbury said.
Sainsbury said Giant is a good geographical fit with Shaw's. Giant is expanding north from its Maryland and Virginia base, with plans to open eight stores in this fiscal year -- six in Delaware, Pennsylvania and New Jersey, he said.
Analysts said one reason Sainsbury isn't rushing to buy the rest of Giant is that its core Sainsbury operation back home is being squeezed by rivals like Tesco and Asda. For the year ended March 11, Sainsbury's reported an 11.3% drop in after-tax profits -- its first profit decline in 22 years -- to $721.78 million (478 million pounds) on an 11.9% rise in sales to $20.38 billion (13.5 billion pounds). Currency conversions were at $1.51 per pound.
Observers have criticized Sainsbury's for not reacting to such Tesco initiatives as a customer loyalty card and improved customer service. Sainsbury's same-store sales rose 2.6% in the year vs. 4.8% for Tesco.