ARCADIA, Calif. -- Vons Cos. here said several factors contributed to a 4.2% sales decline in the first quarter ended March 27. Same-store sales fell 5.5%.
Sales totaled $1.14 billion in the 12-week period. Sales have declined for five consecutive quarters.
Among the factors that Vons said contributed to the lower sales were the weak economy, competitive new-store openings and remodels, and Vons' own reduced shelf prices, which were implemented in the recently launched Vons Value Program.
Excluding charges of about $3 million related to a Jan. 17 earthquake, net income totaled $12 million, or 28 cents per share, in the quarter. Net income in the year-ago period was $15.9 million, or 37 cents per share.
Vons said the first-quarter earthquake occurred four days after it launched a price-cutting program at 346 stores.
"This event substantially disrupted the introduction of the new program and caused the company to make a costly relaunch of its marketing program," said Roger E. Stangeland, chairman. However, the "indicators are [moving] in the right direction" and Vons is confident it's on the right track toward improving sales momentum, he said.
Stangeland said Vons has improved its same-store sales sequentially [although they remained negative] every month this year. Customer counts are improving at a greater rate than sales and are approaching levels exceeding year-ago results.
Securities analysts said the first-quarter results indicate Vons has a long way to go before it regains the market share it has lost since 1992. Although its market share has dropped from between 24% and 25% to the lower 20% range, Vons still maintains a market-leading position over its competition, observers said.
Rick Church, a securities analyst at Smith Barney Shearson, New York, said Vons results were below expectations. "Vons is taking a very disciplined and methodical approach to recapturing lost market share," he said. "It has taken a while for Vons to get its value-orientation out of whack and it's going to take a while to get it back in line with the marketplace. That's the challenge."
Debra Levin, a securities analyst at Morgan Stanley, New York, said Vons' earnings were below her estimate of 31 cents per share. Sales and gross margins were a bit weaker than expected.
