TORONTO (FNS) -- Executives at Oshawa Group, based here, tried last week to convince angry shareholders that the future is looking brighter despite a period of poor financial showings.
Allister Graham, Oshawa's chairman and chief executive officer, acknowledged at the company's annual meeting here that last year's financial results -- as well as the company's performance in the first quarter of this year -- "are clearly unsatisfactory."
For the year ended Jan. 27, sales were up 3.6% to $4.59 billion ($6.38 billion Canadian) compared with $4.43 billion the previous year. But net earnings declined 15.3% to $39.71 million, or $1.04 per share, compared with $46.91 million, or $1.20 per share, the previous year.
Executives blamed the poor showing on Ontario's "severe competitive activity."
"It is important to look beyond today's limited returns to the large, fundamental alterations that we are presently making to the company," Graham said.
Robert Boyd, chief financial officer, said the company is in the middle of a $140 million capital expenditure program, approximately 30% higher than last year's level. About $86 million will go toward new stores and remodels, including 31 expansions and new stores in Ontario over the next six months.
About $55 million will be put toward technological improvements and other investments, the company said.
Graham said the burden of reorganizing IGA stores and Oshawa's wholesale distribution operation had cut into the previous year's earnings. The task now is to transform the regional operations into a cohesive national retailer, he said. Areas to be realigned include information technology, purchasing, logistics and retail development.
While he insisted that the changes would turn around the company's slumping financial results, Graham shifted the focus of the meeting to the company's aggressive redirection program, which mostly involves a further commitment to food service based on anticipated consumer spending.
"More money will be spent on food consumed outside the home than for in-home meals," he predicted.
Last year, Oshawa purchased two large food-service distributors, Neptune Food Services, in British Columbia, and Scott National, in Manitoba, Saskatchewan and Alberta. The acquisitions boosted the company's annual food-service sales from $360 million to $863 million.