SALISBURY, NC – Food Lion, Inc. (Nasdaq: FDLNA, FDLNB) reported annual basic earnings per common share of $0.57 compared with $0.37 per share in 1997--an increase of 54 percent. In the fourth quarter, earnings per share were $0.18.
Food Lion’s annual earnings of $272.6 million were posted on fiscal 1998 sales of $10.2 billion and represent a 58 percent increase over 1997 earnings. Same store sales for the fourth quarter were up 3.7 percent, while the Company finished the year with an annual same store sales increase of 2.6 percent.
There were a number of adjustments to earnings during the 1997 and 1998 fiscal years. To recap: in 1998, the Company received a tax refund and related interest income resulting from an Internal Revenue Service audit of prior tax years, and there were changes in the recording of sales tax related to the Company’s loyalty card program. In 1997, the Company experienced an additional week of sales in the fourth quarter and adjusted earnings to reflect store closing charges associated with the divestiture of Food Lion’s Southwest operations.
After considering these adjustments, 1998 earnings increased by 22 percent on annual sales that were 6 percent higher than the previous year on a comparable basis. Fourth quarter sales of $3.2 billion were up 8 percent and quarterly earnings rose by 20 percent on an adjusted basis.
“A year of strong sales and continued expansion through new store growth and an aggressive remodeling program contributed to Food Lion’s outstanding performance,” said Company President and Chief Executive Officer Tom Smith. “Our keen focus on convenience, quality and low price continues to cement relationships our stores have with their local customers. Attention to store facilities and merchandising techniques throughout the Food Lion and Kash n’ Karry store network has drawn new customers into the stores, enhancing opportunities to build loyalty among consumers.”
Food Lion increased retail square footage by 8 percent in 1998. The increase was accomplished by adding 79 new stores, including the relocation of 17 existing supermarkets. Twelve stores were closed and the Company remodeled or expanded 141 supermarkets. In 1999, Food Lion plans to open 80 new supermarkets, including the replacement of 15 existing stores. The Company plans to close 20 stores in 1999. Approximately 140 stores will be remodeled or expanded, including 22 Kash n’ Karry supermarkets. By year end, approximately 75 percent of the subsidiary’s 91 stores will have been refreshed.
Food Lion reactivated its share repurchase program during the fourth quarter of 1998, purchasing five million shares at a cost of $50.1 million. Food Lion presently has approximately 478.7 million shares outstanding.
The Board of Directors approved a 12 percent increase in the cash dividend for shareholders of record as of March 1, 1999. The dividend of $0.042 per share for outstanding Class A shares and $0.0415 per share for outstanding Class B shares will be payable on March 15, 1999.
With 1998 sales of $10.2 billion, Food Lion is the nation’s 12th largest supermarket chain. The Company has over 90,000 employees, serving more than 10 million customers weekly at 1,207 supermarkets in the Southeast and Mid-Atlantic. For more information, visit our website at www.foodlion.com.
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