MERGERS AND INTEGRATIONS 1999-02-22 (7)

MICHAEL HARRISON

Food Lion Stressing Sales and Prices

Two of the main objectives for Food Lion, Salisbury, N.C., in fiscal 1999 are maintaining its reputation as a low-price leader and increasing same-store sales by at least 2.2%.

The company would also like to increase market share through acquisitions and get the seven new Kash n' Karry stores it plans to open in Florida this year off to a running start, top Food Lion executives said.

"We're spending quite a bit on Kash n' Karry to get those up to speed," said Laura Kendall, chief financial officer. Capital projects slated for those stores include 22 remodels of the Kash n' Karry stores the company acquired last year.

Overall, Food Lion will open 80 new stores, close what Kendall referred to as "35 poor performers" and end the fiscal year with a net total of 1,252 stores in 11 states.

Tom Smith, president and chief executive officer, said, "We want to protect market share and continue to keep growing." Among the company's "strategic strengths" he said, are "strong brand names" and "our strong financial position." (See story, Page 8). "Since we have such a strong financial position we can look aggressively for acquisitions. We believe that is the best way to expand into new market areas."

Asked if Food Lion had a specific criterion for acquisition targets, he said, "We feel comfortable looking at any kind of chain where we feel we can help them."

The company will continue to rely on its two customer-loyalty card programs -- they have reached approximately 5.8 million homes, according to Smith -- to help generate sales. "We're very excited about the possibilities of using this as a greater marketing tool," he said.

Kendall added, "We continue to use category management and merchandising to drive our business." Smith also said, "We build our business around what the customers say. The No. 1 thing they continue to ask for is low prices. Second is convenience. Our concentration is on low prices and convenience."