DELCHAMPS TO INCREASE CAPITAL SPENDING

JENNIFER BALJKO

MOBILE, Ala. -- Delchamps here plans to fuel its financial growth with capital projects and systems upgrades in fiscal 1997.

The chain has budgeted $25.2 million for capital spending in 1997, 16% more than the $21.7 million in fiscal 1996, the company's annual report said. Projects include two new stores, 17 remodels and installation of more front-end equipment.

New stores will be in current markets, but no sites have not been chosen yet, Timothy E. Kullman, senior vice president and chief financial officer, told SN. Depending on the location, the units could be bigger or smaller than the chain's 42,000-square-foot average store size, he said.

The planned remodels will be more extensive than those in fiscal 1996, Kullman added. Most of the projects will include systems upgrades and changes in store and department layout; last year's renovations focused on sprucing up the stores' appearance, he said.

"We will continue to emphasize the absolute need to win in the areas our customers deem most important: low prices; fresh, top-quality perishables; improved variety; improved checkout service, and dependability," David W. Morrow, chairman and chief executive officer, said in the report. "We have completed a very exciting and productive year at Delchamps. We are now well-positioned to take advantage of opportunities for future growth."

Delchamps -- which operates 119 supermarkets in Alabama, Louisiana and Mississippi plus 10 liquor stores in Florida -- divided its selling areas last year and added more managers. It also launched a major merchandising campaign to promote a new low-price stance, remodeled 48 units and opened a 46,000-square-foot store, the report said. The chain opened its 118th and 119th units in Robertsdale and Mobile, Ala., in late summer.

Since those moves, Delchamps' annual sales climbed 6.9% to $1.13 billion, and same-store sales increased 7%. Also, the chain had $3.85 million in net income vs. a net loss the prior year. "To continue our store improvement plan and reach our goal of better sales per foot, we plan to remodel another 17 stores next year and open two stores," Morrow said. "Improvements in selling space and better sales per foot will also allow us to increase profits."

Each Delchamps store also has been fitted with a direct-store delivery system to improve accounting and control merchandise deliveries by suppliers, the report said.