MAUMEE, Ohio -- After reporting record sales and earnings for fiscal 1997, Seaway Food Town here said it will grow through acquisitions in 1998 and roll out a new everyday-low-price format in markets it does not now serve.
, said the company's investments in facilities renovation and improvement, technology and efficiency programs "have been bearing fruit."
"We feel very strongly that facilities updating is of critical importance," Iott said. "We are currently seeking to develop a growth strategy for our primary market area -- within 200 miles of Toledo, excluding major metropolitan markets -- which is focused on acquiring other food retailers that can complement and benefit from our existing infrastructure. We know this area well and feel that it holds excellent promise for future growth."
The company invested $19.7 million in capital improvements last year and increased its square footage by roughly 201,000 square feet. Seaway opened five new stores and remodeled four supermarkets, Iott said. Three of those stores were upgraded to Food Town Plus stores and one was converted from a Food Town Plus to the company's new upscale Marketplace format.
Subsequent to the end of the fiscal year, the company also converted a conventional unit to a new discount format, Kash N' Karry.
"This format is designed to fill a unique niche in the market, competing with the newest generation of limited-assortment, everyday-low-priced retailers which are popping up everywhere," Iott said. "The initial performance of this unit has been good and we are in the tuning-up and evaluation phase right now. We are confident this format will help us expand our market penetration and present opportunities in markets we presently do not service."
Iott said sales for the year were $608.4 million, an increase of 1.8% from $597.5 million in the previous fiscal year. After calculating for an extra week in the previous fiscal year, Iott said Seaway's sales increased 3.8% in fiscal 1997.
Net income for the 52-week year increased 16.5% to a record $6.4 million, or $1.45 per share, compared with $5.5 million, or $1.25 per share, in the 53 weeks of fiscal 1996. After adjusting for the extra week, earnings were up 31.7% from 1996.
Sales for the first quarter of fiscal 1998, ended Nov. 29, were $153.95 million, a 4.1% increase over $147.95 million in the year-ago quarter.
Sales in comparable stores, including replacement supermarkets and format conversions that were in operation during the first quarters of both fiscal years, were up 0.7%.
Net income in the first quarter was $1.37 million, or 31 cents per share, compared with $991,000, or 23 cents per share, last year, a 38.4% increase. Earnings before interest, taxes depreciation, amortization and last-in, first-out charges/credits were $6.86 million, or 4.47% of sales, up 12% from $6.13 million, or 4.14% of sales in the year-ago quarter.
Iott said the company also negotiated a new six-year contract with Teamster warehouse employees a year ahead of schedule, which "assures both parties of a stable economical operating environment for the next six years."
With that contract in place, Seaway will consolidate two of its warehouses into a single entity, Iott said. That project is expected to be completed by spring.
"I think this is an excellent example of labor and management working together for the common good," he said.
The company operates 45 supermarkets, 28 of which are large Food Town Plus combination stores; and 25 Pharm drug stores. A year ago there were 44 supermarkets and 23 drug stores.