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VONS REPORTS SECOND QUARTER RESULTS

 ARCADIA, Calif., July 22 /PRNewswire/ -- The Vons Companies Inc. today announced net income for the 12 weeks ended June 20, 1993, of $17.7 million, or $.40 per share, compared with $5.0 million, or $.12 per share, in the year-ago quarter. Net income for the second quarter of 1992 included an extraordinary after-tax charge of $12.2 million, or $.28 per share, arising from debt refinancing. Excluding the 1992 extraordinary item, net income per share was flat with the year-ago quarter.
 "Our ability to report solid, though flat, earnings during these difficult economic times reflects the fundamental strength of our business as well as the skill of our management team," said Roger E. Stangeland, chairman and chief executive officer. "Looking ahead, our ability to preserve and grow earnings is largely dependent on the economic recovery of the regions we serve. In view of current conditions, the company's near term sales outlook is not expected to improve materially. In the meantime, we continue to evaluate our current operating and merchandising strategies to assure that the business is operated to balance both its short and long run success," he said.
 Operating cash flow (defined as operating income plus depreciation and amortization of goodwill and other assets and LIFO charge) was $73.2 million, or 6.2 percent of sales, in the second quarter of 1993, compared with $72.4 million, or 5.6 percent of sales, in the second quarter of 1992.
 Sales in the second quarter of 1993 were $1,175.3 million, compared with $1,286.0 million a year ago, an 8.6 percent decrease. Same store sales in the second quarter of 1993 decreased 9.3 percent. Sales continue to be impacted by poor economic conditions in the company's various marketing regions, ongoing competitive new store and remodel activity, pricing and promotional changes by certain competitors and the residual impact of the Foodmaker food poisoning epidemic.
 Gross margin in the second quarter of 1993 was 25.3 percent of sales, compared with 24.5 percent of sales in the year-ago quarter, an 80 basis point improvement. This improvement reflects the benefits of the company's ongoing remodel and new store programs, favorable purchasing opportunities as well as the ability in the latter half of 1992 to pass through market-wide cost increases in the form of higher prices and increase margins where competitive conditions allowed. Partially offsetting the improvement was an increase in depreciation expense and promotional pricing activity in 1993.
 Selling and administrative expenses were $246.6 million, or 21.0 percent of sales, in the second quarter of 1993, compared with $261.7 million, or 20.3 percent of sales, in the second quarter a year ago. The increase was due primarily to market-wide negotiated union wage increases and higher blended wage rates and costs associated with a soft sales environment, partially offset by increased sales per labor hour.
 "Due to the efforts of the Vons employees, we have achieved an all time high in employee productivity as measured by sales per labor hour. This is an example of the company-wide cost saving focus that will help us to effectively manage our business during these difficult economic times," Stangeland said.
 Interest expense in the second quarter of 1993 was $15.2 million, compared with $18.9 million in the year-ago quarter. The decrease reflects the benefits of the company's debt refinancing program completed in the second half of 1992.
 During the second quarter of 1993 the company completed 17 store remodel projects. No new stores were opened. Gross square footage at the end of second quarter 1993 was 11,748,000.
 Cash capital expenditures in the second quarter of 1993 were $44.8 million and for the 24 weeks ended June 20, 1993, cash capital expenditures were $75.7 million.
 "Our strategy continues to be to reinvest steadily in our business. By year-end 1993 we will have opened 14 new stores, remodeled approximately 50-60 stores and invested heavily in both consumer and cost-saving technology. We are building our business for the long term. We believe that by maintaining a contemporary store base that is operated with a tight cost structure, we will be able to maximize our operating leverage when the economic recovery begins," Stangeland said.
 At June 20, 1993, the company's revolving debt borrowings totaled $301.9 million and the company had available unused credit of $92.2 million under its Revolving Credit Facility. At the end of the second quarter, debt as a percent of total capitalization was 61.6 percent.
 Subsequent to the end of the second quarter, the company introduced a new store format, Expo. On July 1, 1993, three Expo stores were simultaneously opened in Fontana, Victorville and Colton, Calif. This new format is an innovative concept targeting warehouse and club shoppers by offering valu-pak and large size grocery and drug items at competitive prices.
 Vons is the largest supermarket operator in Southern California. The company currently operates 349 stores under the Vons, Pavilions, Tianguis, Williams Bros. and Expo names.
 THE VONS COMPANIES INC.
 Condensed Consolidated Results of Operations
 (In millions of dollars, except share data)
 (Unaudited)
 12 weeks ended 24 weeks ended
 June 20, June 14, June 20, June 14,
 1993 1992 1993 1992
 (restated) (restated)
 Sales $1,175.3 $1,286.0 $2,369.5 $2,554.2
 Costs and expenses:
 Cost of sales, buying
 and occupancy 878.1 971.0 1,769.9 1,925.0
 Selling and administrative
 expenses 246.6 261.7 502.0 527.9
 Amortization of excess
 cost over net assets
 acquired 3.5 3.5 7.0 6.9
 Operating income 47.1 49.8 90.6 94.4
 Interest expense, net 15.2 18.9 30.1 36.6
 Income before income tax
 provision 31.9 30.9 60.5 57.8
 Income tax provision 14.2 13.7 26.9 25.6
 Income before extraordinary
 item and cumulative effect
 of change in accounting for
 retiree medical benefits 17.7 17.2 33.6 32.2
 Extraordinary item - debt
 refinancing, net of tax
 benefit of $8.3 million
 and $8.6 million,
 respectively -- (12.2) -- (12.7)
 Income before cumulative
 effect of change in
 accounting for retiree
 medical benefits 17.7 5.0 33.6 19.5
 Cumulative effect of
 change in accounting
 for retiree medical
 benefits, net of tax
 benefit of $10.2 million -- -- -- (15.5)
 Net income $17.7 $5.0 $33.6 $4.0
 Income per common share:
 Income before extraordinary
 item and cumulative effect
 of change in accounting
 for retiree medical
 benefits $.40 $.40 $.77 $.75
 Extraordinary item -- (.28) -- (.29)
 Cumulative effect of change
 in accounting for retiree
 medical benefits -- -- -- (.36)
 Net income $.40 $.12 $.77 $.10
 Weighted average common
 shares and common share
 equivalents 43,500,000 43,500,000 43,500,000 43,500,000
 Certain non-cash charges
 LIFO charge $1.1 $1.2 $2.9 $2.9
 Depreciation and
 amortization of property
 and capital leases 20.3 16.8 39.5 32.5
 Amortization of excess cost
 over net assets acquired
 and other assets 4.7 4.6 9.3 9.1
 Amortization of debt
 discount and deferred
 financing costs 1.4 1.5 2.9 3.0
 Total non-cash charges $27.5 $24.1 $54.6 $47.5
 THE VONS COMPANIES INC.
 Condensed Consolidated Balance Sheets
 (In millions of dollars)
 (Unaudited)
 June 20, 1993 Jan. 3, 1993
 Assets
 Current Assets
 Cash $6.4 $8.3
 Accounts receivable 37.7 41.7
 Inventories 350.1 371.7
 Other 40.6 43.0
 Total current assets 434.8 464.7
 Property and equipment, net 1,074.5 1,032.2
 Excess of cost over net
 assets acquired 520.9 527.9
 Other 45.9 41.2
 Total assets $2,076.1 $2,066.0
 Liabilities and Shareholders' Equity
 Current liabilities:
 Current maturities of
 long-term debt and capital
 lease obligations $10.1 $7.1
 Accounts payable 241.6 299.7
 Accrued liabilities 221.0 249.7
 Total current liabilities 472.7 556.5
 Accrued self-insurance and
 noncurrent liabilities 240.8 228.2
 Senior debt and capital
 lease obligations 493.1 445.6
 Subordinated debt, net 342.6 342.5
 Shareholders' equity 526.9 493.2
 Total liabilities and
 shareholders' equity $2,076.1 $2,066.0
 -0- 7/22/93
 /CONTACT: Mary M. McAboy of The Vons Companies, 818-821-7897/
 (VON)


CO: The Vons Companies Inc. ST: California IN: REA SU: ERN

LM-JL -- LA012 -- 4318 07/22/93 08:35 EDT
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Date:Jul 22, 1993
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