MILWAUKEE -- Roundy's Supermarkets here last week said the acquisition of 17 stores helped boost retail sales for the second quarter and first half ending July 2, while overall sales declined as the company continues its transition from being a wholesaler to a retailer.
Sales fell 4.9% to $946.5 million for the 13-week quarter and 3.9% to $1.9 billion for the half, while net income rose 23.9% to $18.5 million for the quarter and 167.8% to $81.5 million for the half. Earnings before interest, taxes, depreciation and amortization climbed 31% to $57.8 million for the quarter and 17.1% to $103.6 million for the half.
Sales in the company's 132-store retail segment grew 10% to $824.5 million in the quarter, which the company said was due largely to the addition of the 17 stores, which contributed $79.5 million to the total. For the half, retail sales rose 10.5% to $1.6 billion with the addition of 20 stores, which the company said contributed approximately $145.7 million to the total.
Sales in Roundy's independent distribution segment fell 50.4% to $121.9 million in the quarter and 46.9% to $256.1 million for the half, which the company attributed to the loss of business following the closure of warehouses in Eldorado, Ill., and Evansville, Ind., in September 2004 and the loss of distribution sales when 14 of the 17 acquired stores shifted to the retail segment.
Comparable-store sales in the retail segment declined 1.6% for the quarter and 0.3% for the half. The company said it attributed the declines to the shift of the Easter holiday from the second quarter of 2004 to the first quarter this year; the shift of the July Fourth holiday from the second quarter last year to the third quarter this year, and the impact of cannibalization of new stores on existing stores. Excluding those factors, the company said retail comps were up 0.6% for the quarter and 0.9% for the half.
Roundy's 132 retail stores include 74 Pick 'n Saves, 26 Copps Food Stores and 32 Rainbows Foods.
"We continue to be pleased with our team's focus, which is leading to consistent retail sales and profitability growth," said Robert A. Mariano, chairman, president and chief executive officer.
Darren Karst, executive vice president and chief financial officer, said during a conference call with analysts that capital spending totaled $23.4 million for the quarter, compared with $11.4 million a year ago, and $47 million for the first six months, compared with $23.2 million a year ago. He said the increase reflects "record spending" on new stores and remodels.
The company has opened three new stores and two replacement units this year, and Mariano told analysts he anticipates a similar number of openings next year. Karst said Roundy's expects to spend approximately $100 million on capital investments this year, excluding acquisition expenses.
During the conference call, Mariano said Roundy's opted to change advertising agencies as part of the normal course of business. The company said last week that it selected Kerker, a Minneapolis-based advertising and marketing agency, to develop a new integrated brand campaign including account planning, brand strategy, creative and media, beginning Sept. 1.
