WEIS PLANS $127 MILLION INVESTMENT IN STORE BASE

GREG GATTUSO

SUNBURY, Pa. -- Weis Markets here announced it will invest $127 million in its store base over the next 18 months, bolstering its presence in Pennsylvania and Maryland and growing in New Jersey, where it currently operates one store.

The new program, which is the company's largest expansion plan ever, calls for construction of seven new superstores, 11 expansions and 13 remodels.

Recent new store construction and renovations drove sales up 3.7% in 1997, to $1.82 billion. Net earnings were $78.2 million, or $1.87 per share. Shareholders received a dividend for the 32nd consecutive year, the company said.

Speaking at the company's annual shareholders' meeting here, Norman S. Rich, Weis Markets president, said the company's growth will come through new store construction, enlargements/remodels and through acquisition.

"We continue to look for acquisitions in our existing markets and in contiguous regions -- if they make sense for our company," Rich said.

In the last five years, the company has added 19 units through acquisition -- the 13-store Mr. Z's operation in northeastern Pennsylvania and six Kings Supermarkets in Pennsylvania's Lehigh Valley.

The company said new stores and remodels will all follow Weis Markets' new prototype superstore design, which measures about 53,000 square feet and emphasizes perishables and such service departments as an oversized deli with express checkout, pharmacy, bagel kitchen, scratch bakery and bank branches.

Bob Greene, a financial analyst for Value Line, New York, said the company will most likely stick to its strategy of building in small-town markets, rather than entering metropolitan markets like Philadelphia and Pittsburgh.

"Inside Pennsylvania, there are areas to go, but I think they're trying to edge out on the perimeter," said Greene. "They want to branch out with their larger stores and their higher-margin [service] departments. That seems to be a big priority right now."

Robert F. Weis, chairman of Weis Markets, said the newly announced capital program is an extension of a program the company launched in 1995. Since then, the company has built 25 superstores and expanded or remodeled 38 other units, about a third of its store base.

"Over the next 18 months, we will continue to focus our expansion in Pennsylvania and in Maryland," he said. "We will also accelerate our development efforts in New Jersey."

The expansion program is subject to a number of factors, such as the company's ability to secure sites, local regulatory approval and construction timetables, he added.

Weis said that in 1997, the company invested $64.1 million for new stores, expansions, remodels and support facilities. The company built five new superstores in Brodheadsville, Chambersburg, Gap, Pottsville and York, Pa. The company also expanded three stores and remodeled 13 others last year. Total square footage exceeded 6.2 million in 1997.

Weis Markets is currently building a 65,000-square-foot superstore in Lancaster County and a 53,000-square-foot unit in Glen Burnie, Md. It also recently announced the construction of two additional superstores in Maryland, bringing the total number of stores there from 18 to 22 within 18 months.

In addition, the company is currently expanding four stores in Pennsylvania: in Lancaster, Manheim, York and Lansdale. It recently completed remodels in Palmyra, Harrisburg and the Poconos.

Weis Markets currently operates 154 stores in six states: Pennsylvania, Maryland, New Jersey, New York, Virginia and West Virginia. It operates 129 stores in its home state, Pennsylvania, including 18 under the Mr. Z's banner and six under the Kings Supermarkets banner.

Despite its concentration of stores in Pennsylvania, a spokesman for the chain said there is still room to grow in the state.

"We continue to look at sites in Pennsylvania all the time," said the spokesman, Dennis Curtin.

Although earnings have been negatively affected by Weis' SuperPetz subsidiary over the past several quarters, Curtin said the company is determined to turn the subsidiary around, rather than sell it.

The company acquired SuperPetz in 1994 as a two-store operation and expanded it to 43 units in 10 states. It has not added any new stores recently, focusing attention instead on integrating its financial operations into Weis' headquarters, and making many mid- and senior-level management changes, including naming a new chief executive officer.