MILWAUKEE -- Newly acquired stores helped Roundy's here post a 30.9% sales increase for its fiscal first quarter, but cannibalization in some areas due to new openings slowed same-store sales growth, the company said.
Same-store sales increased 1.5% for the quarter ended April 3. However, growth was down from the 4.3% that Roundy's showed in the fourth quarter. One factor was the reopening of five former Kohl's stores, which Roundy's acquired from A&P last October. Those stores, rebannered under the Pick n' Save name, negatively impacted sales at some existing Pick n' Save locations in southeastern Wisconsin, according to Robert Mariano, chairman and chief executive officer of the retailer-wholesaler.
Roundy's expected some cannibalization as the new stores opened, but the strategy will win the company share in those markets over the longer term, Mariano told investors and analysts in a conference call.
"The net goal is to increase aggregate dollar sales as well as overall market share," he said. "Historically, Pick n' Save as a value operator grew from a wide radius. As you develop a tighter network of stores, you get a tighter draw -- which is what we want."
Overall, Roundy's reported revenues of $1.2 billion. Retail sales accounted for $717.8 million of that total, and increased 56.1% from the year-ago quarter. The sales increase resulted from 53 new stores that Roundy's acquired in six separate transactions last year. These include 31 Rainbow Foods stores in the Minneapolis-St. Paul area purchased from Fleming; 16 Pick n' Save locations in Wisconsin, including the former Kohl's stores; and six Copps stores in the Madison, Wis., area bought from A&P.
Wholesale division sales increased 18% to $836.5 million, due to increased sales from company-owned stores and volume from new independent customers, Mariano said.
Earnings of $15.5 million increased 20.4% from a year ago, Roundy's said.
Mariano said he expected sales and profitability to improve among the Rainbow Food stores in Minnesota, particularly after those stores receive remodeling investments. During the first quarter, Roundy's spent $11.9 million; for the year, it expects to spend around $100 million. "We have a fair amount of work to do in Minneapolis in terms of capital investment," he said.
