HEBOYGAN, Wis. -- Fresh Brands here said its new value proposition helped drive sales and profit growth in the second quarter.
The company reported a same-store sales increase of 2.7% for corporate and franchised stores combined and a profit of $195,000 for the second quarter ended July 16. Overall sales of $164 million increased by 0.7%, and earnings of 4 cents a share improved from last year's second quarter, during which Fresh Brands posted a loss of $2.1 million, or 44 cents per share. Fresh Brands, which operates and distributes to corporate and franchised-owned Piggy Wiggly and Dick's Supermarkets stores in Wisconsin, Illinois and Iowa, implemented a new program late last year emphasizing more competitive pricing on center-store merchandise, combined with everyday low prices in general merchandise and health and beauty care products.
"As you can see from the numbers, the value proposition that we launched last November at our corporate and franchised Piggly Wiggly stores has been working," Louis Stinebaugh, Fresh Brands' president and chief operating officer, said in a conference call. "Consumers are getting the message and responding."
Comparable-store sales among Fresh Brands' corporate stores increased by 1.6% -- reflecting flat sales at the company's Dick's Supermarkets division, which has not yet implemented the lower pricing program in groceries, as well as a competitive opening in one of the corporate store markets.
Earnings were boosted by the closure of two moneylosing corporate stores. The company recognized $1 million in repositioning charges related to the closures, Stinebaugh said.
Wholesale division sales were down 2% during the quarter, reflecting closed stores, the company said.
For the first two quarters of 2005, sales of $361.9 million increased 0.7% from $359.5 million in the same period of 2004. Net income was $406,000, as compared with a $3.8 million loss in the year-ago period.
