Total Sales up 6.8%; Same Store Sales Up 2.0%
Share Repurchase Launched
SALISBURY, NC Today, Food Lion, Inc. (Nasdaq: FDLNA, FDLNB) reported first quarter sales of $2.4 billion, an increase of 4.4 percent over first quarter 1998 sales of $2.3 billion. After adjusting for a change in the way the Company records sales tax related to its loyalty card program, sales were up 6.8 percent. The Company continued its strong same store sales trend with an increase of 2.0 percent.
First quarter earnings were $58.6 million compared with $55.2 million during the same period the previous year, an increase of 6.1 percent. Earnings per common share were $0.12.
The Company recorded an after-tax charge of $2.4 million in the first quarter related to post-retirement benefits payable to Tom Smith, the Company’s former President and Chief Executive Officer. Earnings would have been $61.0 million and $0.13 per share before the charge.
The Board of Directors of Food Lion, Inc. has declared a quarterly cash dividend of $0.0420 per share on the outstanding Class A common shares and $0.0415 per share on the outstanding Class B common shares of the Corporation. The dividend will be payable on May 10 to shareholders of record as of April 26, 1999.
The Board of Directors has also approved the renewal of the annual share repurchase program for 1999 in the amount of $100 million. The company will activate the program immediately.
“We are pleased with Food Lion’s performance during the first quarter of 1999,” said Bill McCanless, President and Chief Executive Officer. “Our strengths lie in what our customers tell us are most important to themlow prices and convenience. Because of our attention to those factors, plus our presence in attractive, economically vibrant markets, we are optimistic about our opportunities for growth during the rest of the year.”
The Company operated a total of 1,223 supermarkets at the end of the quarter. Food Lion opened 21 new stores, including four replacement stores, during the first quarter as part of its aggressive schedule of new store openings. New stores opened in Laurel, Del.; Odenton and Frederick, Md.; Asheboro, Chocowinity, Franklinton, Lincolnton, and Thomasville, N.C.; Barnwell, Chapin, and Lexington, S.C.; Fairview, Knoxville (2), Maryville, Mountain City, and Nashville, Tenn.; and Chantilly, Chesapeake, Manakin Sabot, and Sterling, Va. One underperforming store was closed. The Company plans to open 80 new stores in 1999 and remodel 140 supermarkets during the year. Approximately 49 remodels are expected to be completed during the next three months.
During the quarter, Food Lion signed a contract to purchase the assets of 28 former
A & P locations in Virginia. The Company has completed the acquisition of 18 of those sites and is in the process of finalizing the details on the remaining 10 locations.
The Company’s MVP card continues to bring savings to customers through up to 1,500 monthly Bonus Buys in the store and targeted direct mail to customers’ homes. The MVP Million Dollar Giveaway promotion, which ran during March, resulted in increased card usage by consumers. Approximately 70 percent of the Company’s transactions are made using an MVP card.
Food Lion continues to concentrate on low prices for its customers, and maintained that long-standing commitment through a combination of category management activities and expense control. Food Lion’s expenses, though slightly higher in the first quarter at 15.5 percent, remain well below the industry average and were offset by an increase in gross margin. The Company attributed increased expenses to costs associated with an increase in the number of new store openings in the quarter. Additionally, low unemployment in key Southeast markets has resulted in a tightening of the available labor pool and an increase in employee-related expenses.
With 1998 sales of $10.2 billion, Food Lion is one of the nation’s largest supermarket chains. The Company and its more than 92,000 employees serve approximately 10 million customers a week at 1,223 Food Lion and Kash n’ Karry supermarkets in 11 Southeast and Mid-Atlantic states.
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