Stater Bros. Begins Using New DC

ELLIOT ZWIEBACH

SAN BERNARDINO, Calif. — Stater Bros. Markets here said last week it expects to begin shipments early next month from its new dry grocery distribution center, with shipments from the new refrigerated facility scheduled to begin in early August.

Jack H. Brown, chairman and chief executive officer, also said he expects “that a large number of Albertsons stores may become available soon, and we're putting our wish list together.”

Supervalu, Minneapolis, which owns the Albertsons stores in Southern California, told SN last week it has no plans to sell any of its locations there.

Brown made his remarks during a conference call with bondholders to discuss financial results for the first quarter, which ended Dec. 30.

Net income for the 13-week quarter rose 9.1% to $10.8 million, while sales jumped 4.3% to $943 million, and comparable-store sales rose 3.3%.

The company said comps were negatively impacted by the timing of Christmas Day — the only day of the year Stater stores are closed — which fell in this year's first quarter, compared with the first day of the second quarter a year ago, and which resulted in a sales reduction of $9.4 million.

Brown said he expects compstore sales to hold above 3% for the year.

Gross profit for the quarter fell to 25.92% of sales, compared with 26.75% in the year-ago quarter, “due to inflationary costs that were not fully passed on and our investment in margin to grow sales,” Phil Smith, executive vice president, finance, chief financial officer and chief accounting officer, explained.

He said the company expects to begin realizing savings in the fourth quarter this year from its improved ability to do more forward buying, “and most of that will be reflected in margin,” he said.

Brown said the new grocery warehouse will enable Stater Bros. to serve an additional 300 to 350 stores. “Product can be stacked five levels high, and we won't be using the 1-million-square-foot fifth level at all, while the fourth level will be for forward-buy merchandise, so we'll only be shipping out of levels one to three.”

He said he expects the company to realize more than $20 million in cost savings in fiscal 2009 as a result of operating out of the new facilities.

Stater has three California stores under construction, with a location in Cathedral City scheduled to open in late April; one in Chico due in early August; and one in Moreno Valley expected to open in September, Brown said. Stater has committed to two more new stores for fiscal 2009, he added.