SCHULTZ TO GROW FRANCHISES BUT SCALE DOWN EXPENDITURES

LISA A. TIBBITTS

SHEBOYGAN, Wis. -- Schultz Sav-O Stores here is increasing its investment in its franchise operations, but scaling back its capital expenditures at the corporate level.

In 1995, Schultz will plug more than $17 million into its independent Piggly Wiggly units.

At the corporate level, the company is keeping its capital expenditure outlay low, preferring instead to concentrate on improving customer service via new technology.

"We vigorously support investment by our independent operators and are prepared to provide financial assistance when needed and deemed appropriate," said John Dahly, chief financial officer, at the company's annual meeting here.

While the size of corporate stores has decreased by 2% over the past two years, the average franchised store is 33% larger than it was at the beginning of the decade.

"What this has produced is a series of stores that are dramatically more competitive, appealing and efficient than in 1990, which in turn has generated additional wholesale sales for us and greater financial results for the operators," said James Dickelman, chairman, president and chief executive officer.

Dahly said the company will only spend about $3.8 million at the corporate level in 1995, primarily on upgraded business systems and technology, but he did not provide any details.

Corporate expansion plans will be kept to a minimum. Schultz will build two new stores, including one here, which is a new market for the company. Five more stores will be expanded and one will be remodeled.

At the meeting, Schultz announced record results for the first quarter ended April 22.

Net earnings increased 11.4% to $1.2 million from $1.1 million a year ago. The net earnings to sales ratio reached 0.94%, a significant improvement over other years, Dahly noted.

The company's goal this year is to reach 1.35% in net earnings as a percent of sales. For 1994, he added, that figure exceeded 1.2% -- an all-time high for Schultz.

Net sales dropped 2.2% to $132.3 million from $135.2 million last year. The company blamed the decrease on three factors: the sale of a corporate store at year-end 1994; the closing of a corporate store this February; and the termination of a multi-store customer last February, whom Schultz did not disclose.