OPERATING PROFIT RISES 48% IN YEAR AT SHAW'S

JAMES FALLON

EAST BRIDGEWATER, Mass. (FNS) -- Operating income at Shaw's Supermarkets here rose 47.6% to $46.5 million in the year ended March 12.

Shaw's sales rose 6.7% to $1.97 billion in the 52-week period and same-store sales increased 1% in the second half of the year, its parent company, J. Sainsbury, London, reported last week.

Shaw's had sales of $1.85 billion and operating profit of $31.5 million in the previous fiscal year, Sainsbury said. David Sainsbury, the United Kingdom group's chairman, said the improvements at Shaw's resulted from better distribution and buying. Shaw's has built a strong price position in the New England market and has rolled out multibuy offers to all its stores.

The chain added 10 stores during the year, raising its store count to 87, and increased sales area by 12%. The new units include two Boston stores acquired from the Cerretani family.

Sainsbury said he was pleased with Shaw's results, but also saw room for improvement. The chain's operating margin of about 2.4% compares with average operating margins of 3% to 5% for U.S. food retailers, he said.

In an effort to raise operating margins, Shaw's will roll out more private-label products and seek to increase sales volume.

Sainsbury also said the U.K. group is looking for other acquisitions in the Northeastern United States while it continues to expand Shaw's internally. Shaw's will open three or four stores in the current year.

Shaw's also will consider small acquisitions, such as the Cerretani deal, and could be interested in buying an entire chain in the region if one became available, Sainsbury said.

"But there are no opportunities at the moment because if there were we would do them," he said.

In its year-end results announcement last week, Sainsbury, the United Kingdom's largest food retailer, said group sales increased 9.3% to $16.83 billion (11.22 billion pounds at the exchange rate of $1.50 per pound) in the year ended March 12.

After-tax profit declined 71.9% to $212.25 million (141.5 million pounds). The sharp drop resulted from exceptional charges totaling $554.25 million related to restructuring costs and property writedowns.

YEAR-END RESULTS

Qtr. Ended 3/12/94 3/13/93

Sales $1.97 billion $1.85 billion

Change 6.7%

Oper Inc $48.5 million $31.5 million

Change 47.6%