LOS ANGELES -- Smart & Final here plans to boost the number of new-store openings by 30% to 40% over the next five or six years, possibly opening 70 to 90 additional stores, Etienne Snollaerts, president and chief executive officer, announced during a conference call with analysts.
Smart & Final, which operates 230 stores, opened three stores last year, down from six stores in 2002 and nine in 2001. Yet that number should increase, Snollaerts said, as the company shifts its focus exclusively to retail after divesting food-service operations in Northern California and Florida and a 14-store retail operation in Florida last year.
The company has opened only one store so far this year, "but we're actively in the market [for new locations] and plan to exceed last year's growth rate this year, with more dramatic growth in 2005 and beyond," Snollaerts revealed.
He said the company sees opportunities to open fill-in locations in existing markets in Southern California "before trying to move more aggressively elsewhere, with the [San Francisco] Bay Area as one possible priority.
"We know we can fill in our store base over the next five or six years, with the possibility of 70 to 90 additional stores, which can be easily done if we return to our historical rate of opening seven to nine new stores per year," he stated.
Besides Smart & Final stores, which are geared to consumers and business customers, the company is also prospecting for expansion opportunities for Cash & Carry, its closed-to-the-public business format that operates only as far south as San Jose in Northern California. Snollaerts said the company plans to open its first Cash & Carry location in Southern California later this year, "and we see a lot of potential, if that test store in Los Angeles can work, to mix both formats as we expand."
During the conference call, company officials discussed financial results for the second quarter and first half ended June 13. Sales increased 16.6% to $457.8 million for the 12-week quarter and 17.9% to $881.3 million for the half, while comparable-store sales jumped 16.3% for the quarter and 17.5% for the half.
Rick Phegley, executive vice president and chief financial officer, said the company could not determine how much of the comp-store sales increase was due to customers retained from the 141-day strike-lockout in Southern California that ended in early March. However, he noted that comp-store sales were up 7% in last year's pre-strike third quarter, compared with 20.9% in the fourth quarter of last year and 19% in the first quarter of this year.
Smart & Final reported net income of $8.1 million for the quarter and $14.3 million for the half, compared with losses in the comparable periods a year ago.
The company said it recorded an after-tax loss for the quarter of $200,000 from the effect of discontinuing the Northern California and Florida operations, compared with a loss of $57.3 million in the year-ago quarter related to the sale and divestiture of those operations and a charge of $5.3 million, also in last year's second quarter, representing the cumulative effect of a change in accounting principle related to consolidation of the company's synthetic lease real-estate facility.
