18 IGA UNITS GETTING SOBEYS BANNER

BRIAN DUNN

STELLARTON, Nova Scotia (FNS) -- Sobeys here is converting 18 corporate IGA outlets in Ontario to the Sobeys banner. It's also franchising another 27 corporate IGA and Price Chopper stores that it now owns as a result of its $1.02 billion ($1.5 billion Canadian) purchase of the Oshawa Group of Toronto last year.

The acquisition also resulted in sales tripling for the fourth quarter ended May 1 to $1.83 billion and operating profit doubling to $28.2 million from a year earlier. The latest period, however, saw a net loss of $27.2 million vs. a year-ago profit of $8.84 million, due to restructuring charges related to the merger.

But the company expects to save about $24 million in each of the next two years by combining the two companies.

For the entire year, Sobeys lost $5.5 million on sales of $4.2 billion vs. a profit of $25.3 million on revenues of $2.1 billion. The 18 stores that will be converted are the larger IGA outlets of more than 40,000 square feet that can accommodate Sobeys' large-store format.

The conversion of the 18 stores will bring to 32 the number of Ontario stores under the Sobeys banner.

Another banner Sobeys acquired through the Oshawa deal, Knechtel, will be converted to Sobeys' own Foodland name. Those units will join about 50 Foodland outlets that already operate in smaller Ontario towns.