Roundy’s Supermarkets said Wednesday it will re-evaluate its corporate strategies and infrastructure once it completes its exit from the Minneapolis market — moves that could involve expanding Mariano’s to markets outside the Chicago area and possible divestitures of some of its core Milwaukee assets.
Having announced plans earlier in the day to sell 18 of its 27 Rainbow Stores to a consortium of buyers, with plans to sell or close the remaining nine Twin Cities stores, the company said it expects to finalize plans over the next few months to adjust operations and infrastructure to better fit the size and needs of its ongoing business.
“We plan to right-size our infrastructure in the third quarter, after the Rainbow sales,” Robert A. Mariano, chairman and CEO, told analysts during a conference call to discuss financial results for the first quarter ended March 29.
He said that will include decisions “on the most optimal way to operate in Wisconsin.”
Asked whether that might mean divesting some of the 130 stores it operates in that state, Mariano replied, “Your question is well put, but we’ll take it one step at a time. We will continue to look at our strategic plans and evaluate what’s the best way to go.”
The company said it had a loss for the 12-week quarter of $4.5 million, including a net loss of $5 million for early extinguishment of debt, compared with net income of $8.6 million a year ago. Sales for the quarter increased 1.9% to $1 million, while same-store sales fell 5.2%.
Mariano said same-store sales at nine Mariano’s stores that have been open for more than a year — out of a total of 21 stores — were in the high single digits, with average weekly sales of $1 million per store.
“Our goal is to operate 45 to 50 Mariano’s in the Greater Chicago area, and after we open eight more stores this year [for a total of 29], we see many good sites there for further growth. And we believe the banner has legs and can travel to other markets, and we will look at pursuing that after this year.”
Darren Karst, Roundy’s chief financial officer, said the 27 Rainbow stores have net sales of $600 million, with EBITDA of $23 million, “with both numbers trending down.”
Mariano said sales at the 69 Milwaukee-area Pick ‘n Save stores that have undergone merchandising renewals are still experiencing negative same-store sales — due in large part to competitive openings — despite perishables increases of 150 basis points to 36.1% of sales and increases in private brands of 100 basis points to 23.5% of sales.
Of the 69 stores involved in the renewal efforts, Roundy’s said it stepped up its pricing programs in early April at the initial 14 stores in the group, based on successful practices at Mariano’s and information from its frequent shopper cards, “and we’ve seen very encouraging customer responses,” Mariano said.
“If those continue, we will roll those programs out to additional stores.”
In addition, he said Roundy’s has upgraded websites for all of its banners; introduced new mobile apps for digital programs; introduced programs that enable shoppers to download coupons to their loyalty cards; and boosted its use of social analytics.
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