Roundy’s is seeing improvements in its Pick ‘n Save stores in Wisconsin as it continues to focus on stabilizing and growing its core business there, Robert A. Mariano, chairman, president and CEO of the Milwaukee-based company, told financial analysts recently.

While overall same-store sales for the company were down 2.4% in the fourth quarter that ended Dec. 29 and down 4.7% for the year, the so-called “Milwaukee 14” — the first group of Pick ‘n Saves to undergo the company’s renewal project more than a year ago — showed positive same-store sales, with comps up 1.1% for the quarter and up 1% for the full year, Mariano said.

Robert MarianoRoundy’s expanded the renewal project to its 55 other Pick ‘n Save stores during the second and third quarters last year, he noted, and although results are not yet in positive comp territory “because it’s too early and due to some specific competitive openings,” Mariano said, “feedback thus far from customers continues to be positive — confirmation that our service improvement initiatives are working.”

He said sales trends at the 55 stores have improved by approximately 200 points since the initiatives were launched, “and we anticipate improved financial results for these stores over the course of 2014.”

Perishables business at the 55 stores rose approximately 150 basis points to 34.6% of total sales, he noted, while its own-brand products grew 160 basis points to 23.2% of sales.

EVP and CFO Darren Karst said Roundy’s still expects “the core business to have some deterioration, but I think it’s turning the corner.”

According to Mariano, “We still face a number of challenges in these markets, but we also have a number of opportunities in front of us that we think will prove successful if we execute on our strategies.”

Wall Street analysts focused on the ongoing challenges.

“Despite a favorable long-term outlook for Mariano’s, Roundy’s Chicago banner, the potential for ongoing competitive pressures at Roundy’s [Wisconsin] stores, along with execution challenges of the accelerated new-store growth for the Chicago region, remain key risks,” said Kelly Bania, an analyst with BMO Capital Markets, New York.

Scott Mushkin, an analyst with Wolfe Research, New York, said Roundy’s finds itself in a “beauty and the beast” situation.

The “beast,” he said, is the Pick ‘n Save operation in Wisconsin, “which continues to face significant competitive openings. Adding to the challenge of the store openings is price position in the market, which is 12% to 15% above Walmart, leading to sharp sales declines, particularly in the center store, where volumes look to be shrinking close to 5%.

“Management appears to be focusing on its renewal efforts to improve the store experience, including a focus on perishables, to drive better performance. While this appears to be working to a degree and is preserving gross margins, the sales outlook remains weak and EBITDA in the unit is likely to fall further.”