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Marsh Supermarkets Inc.

Marsh Supermarkets, founded in 1931, has reached the billion-dollar sales milestone in its 60th year of operation.

The company operates 80 supermarkets--including two carrying the new LoBill name--and 171 Village Pantry convenience stores. Its Convenience Store Distributing Co. subsidiary, based in Richmond, provides warehousing and distribution services for more than 1,200 convenience stores in six states.

Marsh recently moved into new corporate headquarters in Indianapolis, causing a temporary weakness in earnings in the first quarter and possibly the second quarter of the fiscal year. That weakness has pushed stock prices lower, but because the company's earnings promise to be strong in the remainder of the fiscal year, the discounted price can be seen as a buying opportunity.

Marsh's supermarket operations were responsible for 76 percent of the company's sales in 1990. Of the 80 supermarkets, 69 are in Indiana and 11 in western Ohio. Same-store sales rose 3.9 percent in 1990, while net income was up 19 percent.

The chain continues to upgrade existing stores, adding specialty departments, such as delicatessens, bakeries, floral shops and video-rental counters. Marsh has built or remodeled about 40 percent of its store base within the past five years.

To illustrate how store upgrades can affect margins, take the example of an 8-year-old suburban Indianapolis unit. Remodeling in 1989 took the store from 29,000 square feet to 43,000, including a new deli-cafe eating area. Before the conversion, revenues were $235,000 a week; in the year after remodeling, weekly revenues averaged $326,000.

Marsh's common stock is divided into Class A (voting) and Class B (non-voting) shares, with ticker symbols of MARSA and MARSB, respectively. Of 26 publicly traded grocery companies that we track--ranging from small regional stores to chains such as American Stores Co. and Kroger Co.--Marsh outperforms the median stock by more than 50 percent.

It is important to note that two of the industry's largest companies, Kroger and Safeway Stores Inc., have negative net worth and therefore may be constrained severely in their ability to rehabilitate existing units to improve margins. We believe Marsh will outdistance the competition in the 1990s because of strong cash flow and the ability to grow from internally generated funds.

Raymond H. Diggle Jr. is director of research for Raffensperger, Hughes and Co. Inc. of Indianapolis.
FINANCIAL DATA
 12 MO. 1990 -LAST 12 MOS.-
 RANGE E.P.S. E.P.S. P/E
$23.50-$14.75 $1.38 $1.65 $10.76
 3-YEAR ($MM)
AVG. P/E DIVIDENDS YIELD MKT. CAP
10.3 $0.44 2.48% $145.6
ANNUAL TRENDS
FISCAL -PER SHARE DATA-
 YEAR SALES (MM) EARNINGS DIVIDENDS
1986 $718.5 $0.77 $0.22
1987 738.2 0.88 0.25
1988 807.1 1.02 0.28
1989 852.9 1.10 0.31
1990 950.3 1.38 0.35
1991 1,046.3 1.65 0.38
LAST 12 MONTHS PRICE CHANGE: 18.7%
AVG. DAILY VOLUME: 14,996 SHARES
This information has been obtained from sources we believe to
be reliable, but it is not guaranteed and does not purport to
be a statement of all material facts. This report is for
informational purposes only and is not a solicitation of orders
to buy or sell securities.
COPYRIGHT 1991 Curtis Magazine Group, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Diggle, Raymond H., Jr.
Publication:Indiana Business Magazine
Article Type:Company Profile
Date:Nov 1, 1991
Words:543
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