VERNON, Calif. -- Looking beyond its strong Western base and recent entry into Florida, Smart & Final here plans to expand into Puerto Rico sometime in 1997, the company told SN last week. The company is also considering sites in Texas, Chicago, the Pacific Northwest and New England, said Leanne Reynolds, director of corporate communications. However, she noted, expansion into any new areas outside Puerto Rico is unlikely before late 1997.
A move into Puerto Rico would represent an extension of the company's entry into Florida earlier this year, Reynolds explained. "Now that we're in Florida and have had an opportunity to do some site surveys, we're actively looking for store locations in Puerto Rico that we would open sometime in 1997. We didn't realize the opportunities that were available there until we were in Florida."
Smart & Final also is doing site surveys in other parts of the country to determine where its next move might be, she said. Factors being considered are population density, overall growth, local economic health, distribution facility availability and the presence of other food-service outlets.
The company entered northern California and Florida by acquiring food-service distribution facilities, Port Stockton Food Distributors,
Stockton, Calif., and Henry Lee Co., Miami, respectively, Reynolds noted. "While access to food-service distribution would be a factor in any noncontiguous expansion, it would not be a requirement," she added. In the first quarter, Smart & Final opened its first six stores in the Miami area: four in Dade County and two in Broward County.
For the 12-week quarter, ended March 24, net earnings jumped 20.6% to $4.2 million, and sales climbed 12% to $282.3 million, Smart & Final reported. Sales at its 164 warehouse stores rose 11% to $211.1 million, and food-service sales increased 15% to $71.2 million. Same-store sales were up 6.7%. The average transaction size rose 2.4% to $31.96, the company noted. Four to six more stores are planned for Florida during the rest of the year, according to Smart & Final's annual report. "Initial store sales have exceeded our expectations," Roger M. Laverty 3rd, president and chief executive officer, said in the report. Plans call for a maximum of 40 stores in the Florida area, including the Puerto Rico units, Reynolds told SN. A key benefit of Smart & Final's strategy of serving warehouse stores and food-service companies through the same distribution facilities, the annual report said, "may be the ability to hit the ground running in new geographic markets [because] leveraging established distributors' facilities will enable us to open stores quickly and efficiently in noncontiguous locales. "We believe the results -- lower buying and distribution costs, greater efficiency and better service -- constitute one heck of a competitive advantage. We're implementing that strategy in northern California and Florida and intend to carry it elsewhere in the future." Smart & Final operates 156 stores in California, Arizona, Nevada, Florida and Mexico, plus the Port Stockton and Henry Lee food-service facilities in northern California and Florida. According to the annual report, store sales accounted for 79%, or $923.1 million, of the company's 1995 volume of $1.2 billion. The company acquired Henry Lee in late 1994 as a preliminary move to opening stores in Florida. Explaining that move, the report said, "The state has a vibrant economy; a tremendous concentration of small, independent restaurants and businesses, and a wide ethnic diversity and strong Hispanic presence. "Henry Lee logs its strongest sales in winter -- an ideal complement to existing Smart & Final store sales, which peak during the summer season." One of the company's goals this year is "to deliver solid results in Florida while maintaining our considerable momentum in existing markets," the report said.
Other strategic moves in fiscal 1995, according to the annual report, included the following:
Smart & Final added fresh meat and liquor and expanded produce at selected stores. It also expanded party assortments at all stores.
