SYRACUSE, N.Y. -- Penn Traffic Co. here said last week it will devote more capital spending to new and replacement stores now that approximately 40% of its existing store base has been upgraded.
Speaking with securities analysts last week, Joseph V. Fisher, president and chief executive officer, said Penn Traffic plans to concentrate more spending in its core markets, which he defined as Columbus, Ohio; Buffalo, Jamestown and Syracuse, N.Y.; and Erie and Johnstown, Pa.
For example, he said four of the 11 stores here have been remodeled in the past two years, with two new stores under construction -- a 58,000-square-foot store in Pulaski, N.Y., north of here, and a 63,000-square-foot store in Fayetteville, N.Y., east of here, both of which are scheduled to open in early summer.
The conference call, scheduled to follow the release of Penn Traffic's second-quarter results on Sept. 13, was delayed because of the terrorist attacks in New York and Washington two days earlier.
During the call, Martin Fox, executive vice president and CFO, said Penn Traffic is spending $55 million on capital items this year.
Of that total, he said the company spent $22.5 million during the first half of the year to open one replacement store in Pennsylvania and complete 21 remodelings, including 11 in Columbus, Ohio, and Johnstown, Pa., with the other 11 spread across several marketing areas.
During the second half he said Penn Traffic expects to complete eight additional major remodelings, for a total for the year of 15% of its square footage. He said the company will also begin work on three or four other new or replacement stores that will be completed next year.
"Two years ago, re-establishing a strong capital expenditures program was one of our major priorities," Fox said. Since mid-1999, he said Penn Traffic has remodeled or replaced 72 of its 220 stores, or 36% of its square footage.
"Including the work done over the past 18 months, we will have invested $140 million in stores and infrastructure and impacted 40% of our square footage," he added.
Capital spending has also gone into technology investments, Fox said, including new logistics software for truck routing and utilization and a new pharmacy system. He said the company is evaluating new point-of-sale systems to replace three older platforms.
Fox said Penn Traffic has cut expenses by rolling out a new labor system, reducing shrink and reducing distribution costs.