Gristede’s Foods, Inc. announced the results of operations for the first quarter (13 weeks) ended February 27, 2000 and the fiscal year (52 weeks) ended November 28, 1999:
Results for the First Quarter Ended February 27, 2000
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1st Quarter 1st Quarter
(13 weeks) (13 weeks)
ended ended
Feb. 27, 2000 Feb. 28, 1999
Sales $ 53,747,897 $ 44,187,791
Adjusted EBITDA* 3,620,185 2,273,355
Net Income 1,006,376 406,696
EPS $0.05 $0.02
Weighted average number
of shares outstanding 19,636,574 19,636,574
* Adjusted EBITDA is net income before interest expense, income taxes, depreciation, non cash charges, and store renovation / new store opening start up and organization costs.
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By GlobalDataSales for the first quarter ended February 27, 2000 were $53,747,897, a 21.6% increase over sales of $44,187,791 for the prior year quarter ended February 28, 1999. Same store sales for the quarter were 12.1% ahead of sales for the comparable period last year.
The Company’s Adjusted EBITDA for the 2000 quarter was $3,620,185 a 59.2% increase over Adjusted EBITDA of $2,273,355 for the comparable period last year. (Adjusted EBITDA is net income before interest expense, income taxes, depreciation, non cash charges, and store renovation / new store opening start up and organization costs).
Net income for the 2000 quarter was $1,006,376, versus a net income of $406,696 the prior quarter last year.
The favorable first quarter results reflect the beneficial impact of the Company’s on going program of store renovations, opening new stores and opening new in-store pharmacies.
As of quarter end February 27, 2000 the Company had completed the remodeling of 27 stores (1 store re-opened as a pharmacy drug store), and had opened 2 new stores. The Company was also operating 4 new in-store pharmacies.
The Company expects to remodel 8 more stores, open 2 new stores and 4 new in-store pharmacies during the current year. Additional store remodelings, new store openings, and new in-store pharmacies are planned for the following year. The results of these store improvements and additions will be reflected in subsequent quarters.
Results for Fiscal Year Ended November 28, 1999
Fiscal Year Fiscal Year
(52 weeks) (52 weeks)
ended ended
Nov. 28, 1999 Nov. 29, 1998
Sales $ 181,980,204 $ 157,462,869
Adjusted EBITDA* 7,413,150 6,966,542
Income / (loss) before taxes and effect
of change in accounting principle (1,441,646) (271,115)
Current period and prior cumulative effect
of change in accounting principle ** (1,409,957) 0
Taxes 21,728 17,224
Net Income / (Loss) (2,873,331) (288,339)
Fiscal Year Fiscal Year
(52 weeks) (52 weeks)
ended ended
Nov. 28, 1999 Nov. 29, 1998
Per share data
Loss before effect of change
in accounting principle $(0.08) $(0.01)
Current period and prior cumulative effect
of change in accounting principle (0.07) —
Net Loss $(0.15) (0.01)
Weighted average number
of shares outstanding 19,636,574 19,636,574
* Adjusted EBITDA is net income before interest expense, income taxes, depreciation, non cash charges, and store renovation / new store opening start up and organization costs (including those related to change in accounting principle SOP 98-5).
** There was a change in accounting principle regarding the reporting of costs of start-up activities (“SOP 98-5”) which became effective for financial statements for fiscal years beginning after December 15, 1998. The new accounting principle, which the Company adopted during fiscal 1999, requires the costs of start up activities, including organization costs, to be expensed as incurred (such costs were previously capitalized), and a write down of the unamortized portion of such costs previously capitalized. This resulted in the Company having to (i) expense $799,521 in start-up costs during fiscal 1999, and (ii) effect a non cash write down of $610,428 representing the unamortized portion of such prior period costs. The aggregate impact of the change in accounting principle was $ 1,409,957.
Sales for the fiscal year (52 weeks) ended November 28, 1999 were $181,980,204, a 15.6 % increase over sales of $157,462,869 for the prior year.
Same store sales for fiscal year 1999 were 15.4 % ahead of same store sales for the prior fiscal year.
The Company’s Adjusted EBITDA for fiscal 1999 was $7,413,150 versus Adjusted EBITDA of $6,966,542 for the prior fiscal year.(Adjusted EBITDA is net income before interest expense, income taxes, depreciation, non cash charges, and store renovation / new store opening start up and organization costs (including those related to change in accounting principle SOP 98-5).
The improvement in Adjusted EBITDA reflects the favorable impact of the Company’s on going program of store renovations, opening new stores and opening new in-store pharmacies.
For fiscal 1999, net loss before taxes and before the effect of a change in accounting principle was $1,441,646. After the effects of the change in accounting principle (totaling $1,409,957), the Company reported a net loss of $2,873,331. During the prior year, the Company reported a net loss $288,339.
Results for fiscal 1999 were negatively impacted by the following four factors.
During fiscal 1999 the Company continued its rapid program of remodeling existing stores and opening new stores. In such fiscal year, 8 stores were completely remodeled and had “grand re-openings”, 4 new in-store pharmacies were opened, 2 new stores were opened, and remodeling commenced on 4 stores (which was completed in the subsequent first quarter of fiscal 2000). Thus during fiscal 1999, beneficial capital improvements were partly or wholly made
to a total of 18 stores representing approximately 40% of the Company’s total stores. Although it is expected that this capital improvement program will significantly increase future sales and cash flow (EBITDA), it had a negative impact on current earnings because (i) there are substantial advertising and other start up costs associated with remodeling a store or opening a new store, (ii) there is a temporary deterioration in sales and gross margins during the actual store remodeling process, and (iii) the select price promotional activity associated with the “grand re-opening” of a remodeled store or opening of a new store initially results in lower gross margins.
Certain stores experienced unusually low margins during the fourth quarter of fiscal 1999. These margins were recovered in the subsequent first quarter of fiscal 2000.
There was a change in accounting principle regarding the reporting of
costs of start-up activities (“SOP 98-5”) which the Company adopted during fiscal 1999. This required the costs of start up activities, including organization costs, to be expensed as incurred (such costs were previously capitalized), and a write down of the unamortized portion of such costs previously capitalized. The aggregate impact of the change in accounting principle was $1,409,957.
The Company also recognized a $500,000 non cash increase in its reserve against receivables as a conservative measure.
SEC Filings
The Company filed today with the SEC its Annual Report for the fiscal year ended November 28, 1999 and Quarterly Report for the first quarter ended February 27, 2000. The Company stated that the delay in the timely filing of these Reports was owing to the installation of a new general ledger software package on November 1, 1999 in order for the Company’s accounting system to be Y2K compliant. The timing of the change in accounting system resulted in the accounting entries for the fourth quarter of fiscal year 1999 being recorded in two separate accounting systems. The substantial amount of accounting,
system, data processing changes and debugging required to integrate the two systems took longer than originally anticipated, resulting in the delayed filing with the SEC of the Reports. The Company had previously made a filing with the SEC seeking an extension in the time required to file its Fiscal Year 1999 Annual Report because of the change in accounting systems.
Trading in the Company’s stock had been halted pending the filing of its 1999 Annual Report and its first Quarterly Report for the period ended February 27, 2000. Trading in the stock will resume after review of these filings by the American Stock Exchange, which the Company expects will occur this week.
The Company is a leading operator of supermarkets in the New York metropolitan area. It presently operates 41 supermarkets and 2 pharmacy drug stores under the banners “Gristede’s” and “Sloan’s”.
