FOOD LION BACK ON EXPANSION PROWL

ELLIOT ZWIEBACH

SALISBURY, N.C. -- Food Lion here is back on a square-footage growth track. After concentrating for the past year or so on getting its house in order and less on new-store expansion, the chain is picking up its growth momentum. It is adding nearly 1 million square feet this month and next for a net total of about 2.6 million square feet in 1995 and a projected 1.7 million square feet next year. That's a considerable change from 1994, when the company experienced a drop of 1.6 million square feet. In that year, the company closed 88 stores while opening 31, for a net loss of 57 units, in a major retrenchment to eliminate underperforming units. The square-footage figures account for all openings and closings during a year.

In the prior six years, Food Lion typically opened more than 100 stores a year while closing only a handful. In 1993, the year before the big falloff, Food Lion gained 2.5 million square feet of space chainwide.

Food Lion said it expects to open a total of 48 new stores this year, including 12 replacement units: 16 stores that have already opened, seven more this month and 25 more in December. The chain said it expects to open 50 more new stores in 1996, including about 20 replacement units. By the end of this year, Food Lion expects to operate a total of 1,074 units in 14 states; by the end of 1996 that number is projected to be close to 2,000.

Included in the total will be at least four large-format stores -- three of which will be open by the end of this year -- featuring expanded delicatessen and bakery sections, plus store-within-a-store formats for pet supplies, health and beauty care, breakfast foods and beverages.

The first large-format unit, a 46,000-square-foot store in

Wake Forest, N.C., opened less than two months ago. A store of 40,500 square feet is scheduled to open this week in Covington, Va., and a store of 45,668 square feet -- the largest Food Lion in the chain -- is scheduled to open in Front Royal, Va., Dec. 28. Food Lion has previously said it plans to open a fourth large-format store in 1996 and then assess the format before moving ahead with further expansion. According to Lee Wilder, an analyst with the Atlanta office of Interstate/Johnson Lane, Charlotte, N.C., "Food Lion is not locked into any strategy for the large-format stores, and my hunch is, if the new format shows an extremely powerful sales momentum, the company will move sooner than later to lock up more locations for similar stores." However, it's still too early to assess the Wake Forest store, she said. "The jury is still out, and while it doesn't appear so far that the store is a blowout success, it is performing ahead of Food Lion's expectations," Wilder told SN. Food Lion officials said that, by the end of the year, the company will have added about 2.6 million square feet of new store space, boosting total square footage to just under 30 million square feet -- a growth rate of about 9% in new square footage for the year. Debra Levin, a securities analyst with Morgan Stanley, New York, said she expects Food Lion to add about 1.7 million square feet in 1996, for a growth rate of 5.9% -- a rate she said is likely to be more typical of the chain's growth over the next few years. According to Levin, the 9% growth rate this year represents a higher-than-average increase for Food Lion, coming as it did off a lower store base in 1994.