LAS VEGAS -- Smith's Food & Drug Centers, Salt Lake City, said it has launched a new customer-service initiative and management incentive program to turn around two years of declining same-store sales.
$2.8 billion in annual sales, saw same-store sales drop 1.4% in 1996 and 3.2% in 1995.
The declining results at existing stores were blamed for losses of $164.2 million in 1996 and $40.5 million in 1995.
In 1996, Smith's left the California market, shutting down all its operations there and selling off all but eight stores in California for $135.9 million.
Smith's said it will now focus on its core markets -- Utah, Nevada, Arizona and New Mexico -- regions with healthy economies, where the company enjoys a first- or second-place market share in metropolitan areas.
To improve sales in those areas, Smith's has launched a customer-service training and incentive program for store-level employees, said Al Rowland, president. Smith's has also launched an incentive program that financially rewards managers who increase sales at their stores.
Smith's will also focus this year on reducing its $618 million debt, said Rowland. The company's debt load has already decreased from the $805 million it received under a new credit arrangement in May 1996, Rowland said. He cited Smith's progress against its debt as one of the company's major accomplishments of 1996.
Another accomplishment was Smith's 15% gain in cash flow to $260.3 million, Rowland said.
However, officials seemed most pleased with the smooth integration of Smitty's, Phoenix, which Smith's acquired last year. Only eight months after the deal was finalized, Smith's has achieved $21 million in cost savings, Rowland said. The company had originally projected $25 million in savings over three years.
"To accomplish all this in only eight months was a significant accomplishment," Rowland said. "And we only lost 1% of market share in the Phoenix market."