FOOD LION, Salisbury, N.C., is expected to announce this week that its Kash n' Karry unit was profitable in the fourth quarter ended Jan. 3. Food Lion, which is scheduled to announce quarterly results Feb. 12, acquired the struggling chain in late 1996 for about $341 million, including the assumption of about $221 million in debt. Tom Smith, Food Lion president, told a local newspaper that Kash n' Karry is expected to be "a positive contributor" in 1998. Debra Levin, a financial analyst with Morgan Stanley Dean Witter, New York, said in a research note, "We expect shares of Food Lion to be strong performers going forward given healthy sales trends, the benefits of the now accretive Kash n' Karry acquisition, contribution from the nine Raleigh units, strong square-footage growth and the recent divestiture of the 61 Southwest units, which were a drag on earnings." Morgan Stanley last week raised its rating on Food Lion shares from outperform to strong buy.
ew stores slated for 1998 nationwide.
STOP & SHOP COS., Quincy, Mass., said it will be a sponsor of the 1998 Winter Olympics in Nagano, Japan, and will run broadcast ads in several New England markets during the event. The spots will appear during popular events including figure skating, skiing and hockey.
DAIRY FARM INTERNATIONAL HOLDINGS LTD., the Hong Kong-based international retailing and wholesaling group, said it will close its Wellsave supermarket operation in Japan at a cost of $24 million U.S. Dairy Farm owns 60% of Wellsave in a joint venture with Japanese retailer Seiyu Ltd. Dairy Farm North Asia regional director Robert Neslund said the business was generating a recurring monthly loss of about $1.2 million. Since Wellsave was launched in September 1995, a number of existing, conventional Japanese supermarkets have become aggressive low-cost promoters and have significantly weakened Wellsave's competitive advantage, Neslund said. Fourteen Wellsave supermarkets are operating, with the first three to close by the end of March and the remainder to be closed by mid-year.
BLUE SQUARE-ISRAEL, Israel's largest retailer, has become the first company to open a supermarket in the country's Arab sector. The new 1,900-square-meter Super Center is located in Shfar'Am, a city of 26,000 people located in Israel's Galilee region. The store will be staffed by Muslim, Christian and Druse employees, the company said. Israel's Arab sector, which comprises about 20% of the Israeli population, is a completely new market for organized retailing, and the chain, based in Givatayim, plans to open more stores in the region.
CONSUMER CONFIDENCE dropped almost nine points in January, reflecting economic turmoil in Asia -- and economists told SN that confidence levels could drop even lower as the current White House scandal unfolds. "It's a concern that something negative is out there," said Rosalind Wells, chief economist for the National Retail Federation, Washington. She said consumers may not know now how the scandal is going to affect the country, but they know it's not business as usual. "But this doesn't mean that people are not going to go into stores and spend," Wells added. "In fact, they may spend more to help themselves feel better." Donald Ratajczak, director of the Economic Forecasting Center at Georgia State University, Atlanta, also pondered the so-called "Clinton Effect." "It impacts consumer confidence because people are afraid we won't get leadership," he said. "And uncertainty always leads to low confidence." Currently, though, consumer confidence is far from low, even with January's free fall against December's eight-point gain. Now resting at 127.3 points, the New York-based Conference Board's Consumer Confidence Index is still holding on to heights not seen since 1969, economists said.