SALISBURY, N.C. (FNS) -- Food Lion here is proceeding with a strategy to test larger formats featuring "store within a store" concepts as part of a plan to open 50 new units this year.
Four "experimental" stores are slated to open this year in Salisbury and Kernersville, N.C., and in Lorton and Virginia Beach, Va., Tom Smith, chairman, president and chief executive officer, said at the chain's annual meeting here.
The stores, 40,000 to 50,000 square feet, will contain such departments as a "pet shop" that carries pet food and supplies, a health and beauty care area with related accessories and general merchandise, and a large beverage section displaying soft drinks, beer and wine.
Food Lion, whose standard stores average 33,000 square feet, opened three of the bigger units last year: the first in Wake Forest, N.C., and the others in Covington and Front Royal, Va. Of the new-format stores planned, the flagship Salisbury location is a conversion of an existing Food Lion; the Lorton, Virginia Beach and Kernersville units are former Rose's department stores.
There are no plans to convert more Food Lions to the no-frills Stock 'N Save format, another test concept, Smith told reporters after the meeting. Stock 'N Save, currently
with just one location, debuted in April in place of an underperforming Food Lion in Charlotte, N.C. The price-impact store has a quarter of the stockkeeping units of a typical Food Lion, carries private-label and branded products, offers bulk-size goods and is largely self-service, with customers bagging their own groceries, for example.
"It's one of those businesses that relies on word-of-mouth," Smith said. "It's another way to give customers an opportunity to decide whether they want it or not."
Regionally, Food Lion will focus growth in Maryland, Delaware and the Washington area, Smith said in the meeting. The chain currently has no stores in Washington but has been moving closer to that market via expansion in northern Virginia.
This year, Food Lion also plans to buy back up to $100 million worth of stock. "We believe continued investment in Food Lion stock is an excellent tool for creating long-term value for our company and our shareholders," Smith said.
The buyback is the chain's second in two years. Believing that its stock was undervalued, Food Lion last year bought more than 8.4 million Class A shares and more than 1.9 million Class B shares for about $80.3 million. The company holds 13.4 million shares, about 2.8% of the total outstanding.
This year's annual meeting was the first since the late 1980s that was uninterrupted by union activists. In previous meetings, union activists pelted executives with accusations of working employees "off the clock" and other unfair labor practices. The United Food and Commercial Workers union failed to organize workers in 1980, and Food Lion remains union-free.
Smith told reporters after the meeting that the company has "moved past" its problems with UFCW. In a pending lawsuit, Food Lion alleges that the union orchestrated a 1992 "PrimeTime Live" TV news investigation, which showed secret footage of workers repackaging expired meat, and is running a campaign designed to hurt the company financially.