Stater Stockpiles Commodities

SAN BERNARDINO, Calif. — Stater Bros. Market here has been stockpiling commodities whose prices are likely to rise, chain officials said last week during a conference call with analysts.

Phil Smith, executive vice president and chief financial officer, said approximately 12% of Stater's warehouse inventory represents forward buys the chain made in advance of escalating prices on coffee, cereal and other items.

“We took advantage of forward buys as much as we could,” Jack Brown, chairman and chief executive officer, said, “though the manufacturers put limits on how much we could buy.”

Brown said Stater's customer count is up significantly following the launch of the chain's 75th anniversary celebration with a promotion in January that featured several items at 75 cents each.

“In fact, we sold in two days what we anticipated we would sell in a week, and we had to scramble for product,” he said. “And over the last six weeks our customer count is up 378,000.” Sales are also up, he added.

Brown said Stater has been invited to look at 40 stores that are for sale in its operating area, “though we have a possible interest in only two or three of those.”

Asked by one analyst if most of those stores were Supervalu-owned Albertsons locations, Brown declined comment.

For the first quarter, which ended Dec. 26, Stater said net income fell 81% to $1.3 million. Last year's earnings included an after-tax gain of $4.7 million from the sale of the chain's dairy assets.

Net income in this year's first quarter included after-tax charges of $3 million involving one-time costs from the company's refinancing activity; without those costs, net income for the quarter would have been approximately $4.3 million, the company said. Sales for the quarter fell 2.3% to $899 million, and like-store sales also fell 2.3%.

Q1 RESULTS

* INCLUDES AFTER-TAX GAIN OF $4.7 MILLION FROM SALE OF DAIRY ASSETS.