SHEBOYGAN, Wis. -- Schultz Sav-O Stores here said increased health-care costs and fees related to exploring strategic alternatives contributed to an earnings decline for the second quarter and first half ended July 15.
elman, chairman, president and chief executive officer, said the drop in earnings resulted from increased competition in several markets; a 38% increase in the cost of providing retail health and accident insurance for employees, representing an increase of $270,000 for the half that is projected to reach $1.2 million by year-end, and one-time expenses of $350,000 associated with exploring strategic options for the company to grow.
Dickelman also said changes in merchandising and product promotional mix initiated at the beginning of the year have been "quite successful" in partially offsetting the negative factors.
"We are also pleased with the top quality independent customers that we continue to attract to the Piggly Wiggly [franchised store] program," he added. "As many of our competitors increasingly focus on owning their own retail stores to the exclusion of growing their wholesale business, we believe our dual focus will enable us to grow in both business segments."
Schultz said sales in its corporate retail segment rose 1% to $48.4 million in the quarter, following volume increases from the conversion of a franchised unit to a corporate store last November and the replacement of a corporate store in Racine, Wis., in May.
In the wholesale segment sales rose 1.3% to $68.1 million, which the company said it attributed to the conversion of three Wisconsin stores from other wholesalers to the franchised Piggly Wiggly program and the opening of a new franchised unit in Kewaskum, Wis.