GRUPO GIGANTE SETS $80M INVESTMENT PLAN

ELLIOT ZWIEBACH

MEXICO CITY -- Grupo Gigante here said it plans to spend approximately $80 million on capital investments this year, including expenditures for construction of 11 new stores.

As part of its 1994 operating plan, Gigante also expects to close 11 existing Gigante stores and six Bodegas Gigante.

About one-half the 1994 capital expenditures will be devoted to systems and technology, said John McInerney, one of the company's U.S. spokesmen. The balance will be used for new stores, remodels and general improvements, he added.

Grupo Gigante officials said the company will open one joint-venture hypermarket with Carrefour, a leading French retailer, this year and two more next year. The stores will be called Hiper G/Carrefour and will be managed by Carrefour, which has worldwide experience operating hypermarkets.

Grupo Gigante opened an 87,000-square-foot Hiper G unit of its own last December. The joint-venture units are likely to be larger, McInerney said, although he could not specify the size.

Gigante's expansion plans also call for:

Three new Gigante units. This is the company's primary operating format, a supercenter-style store ranging from 30,000 to 70,000 square feet. Including the three new units and another 11 that are scheduled to shut down this year, Grupo Gigante will operate 132 such stores at year's end.

Five Bodegas Gigante. These stores of less than 30,000 square feet are targeted at lower-income consumers. With the opening of the five units this year and the shutdown of six others, Gigante will operate 33 Bodegas.

One Super G. These stores of 32,000 square feet feature more specialized departments and are aimed at upscale consumers. The format made its debut in 1993 with two stores in affluent Guadalajara neighborhoods. With the new unit and the planned conversion of 13 Gigante stores to this format later this year, the company expects to operate 16 Super G stores by year-end 1994.

One SuperMart. The four SuperMarts Gigante currently operates are part of its joint venture with Fleming Cos., Oklahoma City. One of those four stores, in a lower-income neighborhood, will be converted to a Bodegas Gigante later this year.

At the end of 1993, Gigante operated 153 stores under the Gigante banner in 32 Mexican cities and 33 Bodegas Gigante units in 18 cities. It achieved annual sales volume of about $2.3 billion last year, an increase of 24% compared with 1992. Higher operating expenses, however, contributed to a 20% decline in net income, which totaled $25 million.