SALISBURY, NC – Food Lion, Inc. reported record third quarter earnings of $72.8 million or $.15 per share (basic) for the third quarter ended September 12, 1998. Consolidated quarterly sales were $2.38 billion, which is up 0.5 percent over third quarter 1997 sales of $2.37 billion. Adjusting for prior year sales in the Southwest market, which closed in the fourth quarter of 1997, and changes in the recording of sales tax related to the Company’s loyalty card program, total sales were up 5.5 percent over the prior year on a comparable basis. Same store sales increased 1.8 percent for the quarter, and are up 2.1 percent for the year to date.
During the quarter, the Company received a tax refund and related interest income from the Internal Revenue Service in conjunction with an audit of prior tax years. This refund increased net income by $12.0 million or approximately $0.02 per share.
Stated on a comparable basis, third quarter earnings of $60.8 million, before reflecting the tax refund, increased 16% over prior year earnings of $52.4 million. In the third quarter of 1997, a one-time store closing charge of $58.8 million was recorded for the closing of the Southwest market, reducing prior year reported results to a loss of $6.4 million.
“In spite of a heightened competitive environment in our Southeastern markets, Food Lion was able to achieve solid same store sales growth during the quarter, while continuing to improve gross margin and strengthen earnings,” said Food Lion President and Chief Executive Officer, Tom Smith. “The Company concentrated its focus on maintaining low price leadership in all of our markets. It is a strategy that continues to work well for Food Lion.”
Food Lion has increased its projections for new stores in 1998 from 75 to 81. The Company has opened 49 new stores to date. Food Lion opened 16 new stores during the third quarter, including four relocations, in Dover, Del.; Blue Ridge, Ga.; Accokeek, Md.; Carrboro, Kill Devil Hills, Tarboro, and Wilmington, N.C.; Sumter, S.C.; Clarksville and Murfreesboro, Tenn.; and Alexandria, Dumfries, Gloucester, Stephens City, and Virginia Beach, Va. The Company closed three stores in Tampa, Fla.; Monroe, Ga.; and Richmond, Va. At the end of the quarter, Food Lion operated 1,184 supermarkets.
As part of its continuing efforts to maintain outstanding facilities for its customers, Food Lion continued its aggressive store renovation program during the quarter with the completion of 32 remodels. The Company has remodeled or expanded 88 stores this year, and is increasing the number of remodels planned for 1998 from 133 to 142 supermarkets by year end. As a result of Food Lion’s growth through new and remodeled stores, the Company continues to maintain an average store age of five years, compared to an industry average of seven years.
With 1997 sales of $10.2 billion, Food Lion, Inc. is one of the nation's largest supermarket chains. The Company and its more than 80,000 employees serve approximately 10 million customers a week at 1,094 Food Lion supermarkets in 11 states and 90 Kash n’ Karry supermarkets in West Central Florida.
Safe Harbor Statement Regarding Forward-looking Information or Statements
This document contains forward-looking statements that involve uncertainties. Factors that could cause results to differ materially from those in the forward-looking statements are detailed from time to time in reports filed by the Company with the SEC, including Forms 8K, 10Q and 10K.
Contact: Chris Ahearn (704) 633-8250, Ext. 2892