HEBOYGAN, Wis. -- Schultz Sav-O Stores here said weak retail performance caused by competitive pressures in several market areas resulted in net earnings declining 16.1% to $1.7 million in the 12-week third quarter ended Oct. 9.
$375.5 million and earnings per share rose 2 cents to 84 cents.
The company said the only reason for the increase in earnings per share was its ongoing stock repurchase program. As of Oct. 9, the company had spent $8.5 million to repurchase 523,000 shares this year.
Schultz, which is both a retailer and a wholesaler, said its weakest performance was in its retail sector. In the quarter, corporate retail sales declined 1.8% to $46.8 million. Retail and operating expenses also rose about $1.1 million, largely because of increased expenses at the company's Appleton, Wis., store, which opened August 1998. In Schultz' wholesale segment, net sales improved 2.6% to $66.6 million.
James H. Dickelman, Schultz chairman, president and chief executive officer, noted that until third quarter 1999, the company had experienced 26 consecutive quarters of improved earnings.
"Sales were relatively soft for the first eight weeks of the third quarter due, in large measure, to the effect of competitive store openings in several of our markets," he said. "Nonetheless, we are optimistic that favorable sales, which developed in the final four weeks of the third quarter, will continue through the fourth quarter."
Dickelman attributed his optimism to several factors:
The addition of two new wholesale customers during the third quarter.
The rebound in sales from stores affected by competitive openings.
The kickoff of a major advertising and marketing effort celebrating the company's 50 years as Piggly Wiggly in Wisconsin.
He also cited a franchise replacement unit and a new franchise store, both scheduled to be completed in the second quarter of 2000.