For the 16-week first fiscal quarter ended July 22, 2000, The Grand Union Company (OTC.BB:GUCO) posted sales of $658.0 million, compared with $687.3 million reported for the same period a year ago.
Total sales were down 4.26%, with 200 stores in operation this year and 219 last year. Same-store sales declined by 2.67%.
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EBITDA (earnings before interest, taxes, depreciation, amortization, unusual and extraordinary items, and non-cash pension and LIFO charges) for the period was $17.7 million this year, including a gain of approximately $6 million from the sale of the Company’s Deer Park, NY, location. One year ago, EBITDA totaled $32.5 million for the first quarter.
Grand Union, one of the largest food retailers in the northeastern United States, said its performance showed “some improvement” during June and July. However the results continue to reflect intensely competitive markets and the ongoing efforts to drive costs out of the Company’s operations.
Earlier this week, Grand Union announced the elimination of approximately 170 positions, primarily at its Wayne, NJ, corporate headquarters and its office in Clifton Park in upstate New York. The reduction in force, which is expected to yield annual savings of between $8 million and $12 million, will result in a charge against this year’s fiscal second quarter results of approximately $2 million. In addition, the company announced today that it will sell two stores – in Glenbrook, CT and The Bronx, NY and has sold the Little Neck store in Queens. The total proceeds from these transactions will be approximately $9.3 million.
Financial Detail
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By GlobalDataGrand Union’s gross profit for the first quarter of fiscal 2001 was 27.79% of sales, 1.86% below last year’s 29.65%. Operating and administrative expenses, at 25.39% of sales, were up 0.10% from 25.29% a year ago, but were slightly below the immediately prior fourth quarter. Operating and administrative expenses totaled $167.1 million during fiscal 2001’s first quarter, down from $173.8 million last year.
The company’s net loss for the quarter, after giving effect to $40.6 million of amortization of excess reorganization value, totaled $51.7 million, or $1.72 per share. In last year’s first quarter, also after excess reorganization value amortization of $40.6 million and the cumulative effect of a change in accounting of $3.5 million, the net loss was $44.8 million, or $1.49 per share.
Management Commentary
Discussing Grand Union’s results and outlook, Gary M. Philbin, president and chief executive officer, said: “The first quarter began slowly, but we saw some improvement in June and July, largely due to the steps we have taken since early in the quarter to address the basic business issues of improving our top-line sales and gross margin, and eliminating unnecessary costs.”
“We are encouraged by the improved performance we began to see by our store teams late in the first quarter,” Mr. Philbin stated, “and we are hopeful that these early signs of progress will be sustained going forward.”
Concluding his comments, Mr. Philbin said: “The current quarter will again be challenging, and we still do not expect to see year-over-year quarterly improvement any sooner than the third quarter. Also, as previously announced, management is working closely with financial advisors on a new strategic plan, and the Company is exploring suitable corporate alternatives that can best address the vital interests of all of its constituencies.”
Grand Union operates 200 retail food stores in Connecticut, New Jersey, New York, Pennsylvania and Vermont.
Some of the matters discussed herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. For additional information about the Company and its various risk factors, please see the Company’s most recent form 10-K for the fiscal year ended April 1, 2000, as filed with the Securities and Exchange Commission on June 30, 2000.
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands)
(unaudited)
16 Weeks 16 Weeks
Ended Ended
July 22, July 24,
2000 1999(a)
Sales $ 657,987 $ 687,268
Cost of sales 475,153 483,512
Gross profit 182,834 203,756
Operating and administrative expenses 167,070 173,781
Depreciation and amortization 11,367 16,229
Amortization of excess reorganization
value 40,571 40,566
Unusual items 491 -
Interest expense, net 15,024 12,801
(Loss) before income taxes and
cumulative effect of accounting change (51,689) (39,621)
Income tax provision - 1,671
Net (loss) before cumulative effect
of accounting change (51,689) (41,292)
Cumulative effect of accounting
change, net - 3,525
Net (loss) applicable to common stock $ (51,689) $ (44,817)
Net (loss) before cumulative effect
of accounting change per common share $ (1.72) $ (1.37)
Cumulative effect of accounting
change per common share - (0.12)
Basic and diluted net (loss)
per common share $ (1.72) $ (1.49)
Weighted average number of
shares outstanding 29,992,098 30,000,000
EBITDA is calculated as follows:
Gross Profit $ 182,834 $ 203,756
Less: Operating and
administrative expenses 167,070 173,781
Add: Non-cash pension 1,443 2,229
LIFO charges 500 300
EBITDA $ 17,707 $ 32,504
Balance at July 22, 2000
Cash $ 18.6 million
Short-term and long-term debt $ 433.0 million
(a) Results have been restated to reflect the Company's adoption
of SAB 101.
