WINNIPEG, Manitoba -- The North West Company Fund here, operators of 169 stores in rural areas of Canada and Alaska, said sales and earnings rose for the first quarter ended May 1, despite the shutdown of 19 underperforming stores during 1998.
t said overall sales rose 0.3% to $97.2 million (U.S., at an exchange rate of $1 equals $1.4999 Canadian) and same-store sales increased 0.4%, while net income rose 84.7% to $3.5 million, following an unusual item in last year's first quarter.
The company said sales were negatively impacted by the closings last year of 14 stores in Canada and five in Alaska, which were partially offset by the opening of one store in Tadoule Lake, Manitoba, Canada, and two in King Cove and Nuiqsut, Alaska.
In Canada, the closings of the 14 Northern stores resulted in a 4.4% decline in sales to $75.1 million, while same-store sales dropped 2.7% overall, including 1.4% in food and 5.9% in general merchandise.
The company said sales were impacted by new competition, especially in retail fuel categories; a drop in general merchandise sales due to a later spring selling season; planned reductions in seasonal inventory levels, and the decision to move certain general merchandise categories out of the stores and into its catalog business.
Operating cash flow at the Canadian stores rose 30% to $7.7 million, or 10.2% of sales, compared with $5.9 million, or 7.5% a year ago.
The company said it attributed the increases to reduced expenses, lower debt loss, growth in financial services revenue, improved general merchandise margins and the closure of underperforming non-core stores.
In its Alaska operations sales rose 14.7% for the quarter to $22.2 million, while same-store sales were up 8.7%, including a 9% increase in comparable food sales and a 7.4% increase in general merchandise sales.
The company said renovated and replacement stores "continued to produce very strong market share gains and led (the stores') performance, combined with exceptional results from (two) recently opened stores."
Sales also increased as a result of continued improvements in store-level execution of the company's move to increase the allocation of space devoted to food, the company noted.
Operating cash flow in Alaska rose 57.4% to $749,000, or 3.4% of sales, compared with $476,000, or 2.4% of sales a year ago.
Factors that contributed to the gain included higher general merchandise margins, lower store operating expenses and the closure of five underperforming stores at the end of last year, the company said.