WAYNE, N.J. -- An aggressive price promotion helped lift same-store sales for Grand Union Co. here 0.4% in the fourth quarter ended March 30 -- only the second such increase since first-quarter 1992 -- though they dipped 0.9% for the year.
Grand Union reported a net loss of $29.3 million ($2.93 per share) in the quarter, which included a provision of $2.5 million relating to the company's reorganization, compared with a net loss of $45.9 million a year before. Its quarterly loss before amortization of excess reorganization value was $4.7 million (47 cents a share). Net income for the year, which included an extraordinary gain on debt discharge of $854.8 million, was $715.6 million vs. a prior-year net loss of $170.3 million.
Earnings before interest, taxes, depreciation and amortization were $35.9 million (6.9% of sales) in the quarter and $144.3 million (6.3% of sales) in the year.
The same-store sales rise resulted mainly from Grand Union's "More Lower Prices" campaign plus other marketing and customer service programs in the Albany, N.Y., and Bergen County, N.J., areas as well as effects of bankruptcy proceedings on last year's sales, the company said. For the year, metro New York snowstorms aided same-store results, which had been curbed by promotions in the second and third quarters, plus the closings of two metro New York distribution centers.
"The progress in same-store sales this year, culminating in the positive fourth-quarter comparison, demonstrates that our strategy is on target with the customer," according to chairman Roger Stangeland.
To reduce costs, Grand Union in the past year closed three distribution centers; entered into supply agreements with C&S Wholesale Grocers, Brattleboro, Vt.; cut average hourly pay via store voluntary resignation incentive programs; eliminated redundant regional organizations; centralized support services; and decentralized operational control over stores, noted Joseph McCaig, president and chief executive. Savings were reinvested into revamped pricing, new marketing and customer service programs, and improved perishables offerings, he added.
In the fourth quarter, Grand Union renovated two stores, the first under its MASTERS (Maximize All Space, Totally Expand the Right Stuff) strategy, plus expanded one unit and acquired another in New York. During the year, it also opened two new and two replacement units and completed three expansions and four renovations. Capital spending, $46 million in fiscal 1996, is projected at $45 million to $50 million for fiscal 1997, the company said. Three replacement stores now are under construction.