ARCADIA, Calif. -- Vons Cos. here said the elimination of unproductive stores helped boost earnings for the first quarter ended March 26.
And, despite operating 21 stores less during the quarter than it did at this time a year ago, Vons said sales were virtually even with the earlier period -- which the company attributed to improved customer service, advertising and merchandising programs.
Net income for 12 weeks increased 55.6% to $14 million, or 32 cents per share. Operating income increased 29% to $42.2 million.
Total sales for the period were steady at $1.1 billion, while same-stores sales increased 1.6%. Vons said it was its sixth consecutive quarterly increase in same-store sales. Sales per selling square foot were up by about 5%.
Although store payroll expenses have increased through negotiated union wage rates, Vons said it has offset the added costs by improving sales per labor hour and reducing administrative expenses.
During the first quarter, the company opened one store, closed 10 -- including its eight Expo warehouse units -- and completed 10 remodels. The chain now operates 325 stores under the Vons and Pavilions banners.
Mark Husson, vice president of J.P. Morgan Securities, New York, said several factors led to the positive results and will help Vons even more in the future: the company's electronic marketing club, its private-label program and its emphasis on customer service.
The heavily promoted Vons-Club has more than three million members -- a figure that has nearly doubled in a year. It has also led to improved relationships with manufacturers, Husson said.
Husson said Vons had a reputation as a "high-service but high-priced retailer, but its private-label push has improved its pricing image. The chain is successfully drawing shoppers back to its stores."
