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The emphasis is on superstores.

Marketing savvy, stringent cost controls and judicious expansion put the Stop & Shop Companies on a fast growth track in fiscal 1983. The diversified, Boston-based retail company posted sales of $2.8 billion, while earnings climbed 46% over the previous year, to $50.8 million.

The 119-store Supermarket Company, operating primarily in Massachusetts, Rhode Island and Connecticut, accounted for 51% of consolidated net sales, and 17.5% of operating earnings. The emphasis in this sector is on the 45,000- to 55,000-square-foot Super Stop & Shop stores. A strong measure of the success of these new superstore and their impact on the company's overall results is the solid gains in operating profits by the supermarket group of 31.0%. This momentum has continued in the current fiscal year, with the supermarket segment posting a 50.0% increase in operating profit during the first six months, to $14.7 million from $9.8 million the previous year, on a 12.5% increase in sales, from $752.4 million last year to $846.2 million.

Under the direction of President Lewis G. Schaeneman, who has been at the helm since 1980, the division is well on its way to becoming "a superstore company." The movement to build only superstores and to expand some existing units into superstores began in 1982, picked up steam during 1983, and continued at a hectic pace through the first three quarters of this year. Now 13 units strong, the Super Stop & Shop is considered the division's primary vehicle for profitable growth for the balance of the decade. By the end of this fiscal year, 15 of these units are expected to be in operation. It is antiipated that they will represent 22% of the Supermarket Company's volume. By 1986, it is expected that 40% of the division's total volume will be generated from superstores.

Most recently sprouting up in areas such as Orleans, Falmouth, and Quincy, all in Massachusettes, Warwick, R.I., and Clinton, Conn., the Super Stop & Shops are designed to lure customer by blending price with upscale selling.

The Supermarket Company is deeply committed to superstore expansion in the foreseeable future, but neither new construction nor remodeling comes cheaply these days. Consequently, capital expenditure plans for the division call for an estimated $50 million to be spent in fiscal 1984, similar to the amount spent the previous year. The total company's capital expenditures for fiscal 1983 amounted to approximately $150 million. This year, Stop & Shop's capital spending program, including leased equipment, will be an estimated $120 million. With the exception of real estate financing, this will be paid for by internally generated funds.

Stop & Shop's powerhouse on the general merchandise side, the Bradlees Self-Service Department Store division, increased its share of consolidated net sales from 33% in 1981 to 42% in 1983, thanks, in part, to new store openings. The growth of the Bradlees division, coupled with the contributions of the other Stop & Shop general merchandise segments and supermarkets, enabled the organization to realize its long-term objective of an approximately 50-50 volume ratio between its food and general merchandise operations. As the company continues to expand, it is "inevitable" that the ratio will tip in the direction of more general merchandise, says one company spokesperson.

As a whole, Stop & Shop's balance sheet is in good shape, underlined by the fact that the company's more than 20% return on equity exceeds nearly all the companies in the top 10. Rising unit growth and streamlined operations appear to have Stop & Shop well positioned for the price competitive environment.
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Title Annotation:Stop & Shop
Publication:Progressive Grocer
Date:Oct 1, 1984
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