Stater Bros. Margin Investment Sinks Q2 Earnings

Stater Bros. Markets said yesterday it plans to continue investing gross margin to retain and grow its customer base. That approach is working, Jack Brown, chairman and chief executive officer, told investors in a conference call, noting that the chain's customer count increased by 3.1 million in 2008, “and over the last 19 weeks, the count is up 1.6 million” over year-ago levels. Net income

SAN BERNARDINO, Calif. — Stater Bros. Markets here said yesterday it plans to continue investing gross margin to retain and grow its customer base.

That approach is working, Jack Brown, chairman and chief executive officer, told investors in a conference call, noting that the chain's customer count increased by 3.1 million in 2008, “and over the last 19 weeks, the count is up 1.6 million” over year-ago levels.

Net income for the 13-week second quarter that ended March 29 fell 24.5% to $11.1 million, while sales rose 0.6% to $931 million. Comparable-store sales, adjusted for the shift of Easter to this year's third quarter, rose 0.4%. For the half, net income dropped 39.5% to $14.7 million, while sales increased 1.2% to $1.9 billion and comps jumped 0.9%.

Gross profit margin fell to 27.48% during the quarter, compared with 27.69% a year ago, and 26.53% for the half, compared with 26.80% last year.