Pueblo Xtra International, Inc., the parent corporation of Pueblo International, Inc. and the largest supermarket and video rental operator in Puerto Rico and the U.S. Virgin Islands, today announced financial results for the first quarter (16 weeks) ended May 20, 2000.
The Company reported that total sales for the first quarter (16 weeks) ended May 20, 2000 were $197.1 million, versus $217.2 million in sales for the first quarter of the prior year, a decline of 9.3%. For the comparable 16 week period same store sales were $197.1 million versus $217.1 million for the prior year, a decline of 9.2 %. “Same stores” are defined as those stores that were open as of the beginning of both periods and remained open through the end of the periods. Same store sales in the Retail Food Division declined 8.6%. The principal factors contributing to the decline in same stores sales in the Retail Food Division are increased competition, the disruption over the past 20 months caused by repairing and replacing components of the stores damaged by Hurricane Georges and its related impact on customers, and the disruption associated with remodeling stores. Blockbuster Division same store sales decreased 16.7% for the quarter from the comparable period of the prior year. The decrease in Blockbuster same store sales for the quarter was a result of increased competition and a lack of popular new releases of both rental and sell-through videos. Increased competition has been in two forms. One is new competing video outlets. The second, and more significant factor, is increased competition from mass merchandising of self-activated cellular phones and prepaid phone cards on the island of Puerto Rico.
The net loss for the quarter (16 weeks) ended May 20, 2000 was $0.8 million, a decrease of $2.4 million from the net profit of $1.6 million in the first quarter (16 weeks) of the prior fiscal year. EBITDA, as defined, (Earnings Before Interest Expense-net, Income Taxes, Depreciation and Amortization and the loss on the sale/leaseback transaction) was $17.3 million this quarter (16 weeks) ended May 20, 2000, versus $21.8 million for the first quarter of the prior year (16 weeks) ended May 22, 1999. The impact on earnings of the decline in sales was offset somewhat by cost reductions and a gain related to the Company’s hurricane Georges property damage insurance settlement. The net loss for the quarter ended May 20, 2000 includes a $1.5 million gain realized upon completion of the repairs for the damages caused by the hurricane and the related final accounting for such. The impact of the gain on EBITDA was $2.5 million. The quarter ended May 22, 1999 includes a loss on a sale-leaseback transaction which reduced net income by $1.2 million.
William T. Keon III, President and CEO of Pueblo Xtra said, “The combined impact of the marketing plan for fiscal 2001 and the Company’s store remodel program continues to be positive but the impact of Hurricane Georges is still with us. The marketing plan for fiscal 2001 is focused on reintroducing the consumers in our markets to the “new Pueblo” while we continue to remodel stores. We have completed 15 major as well as a number of minor remodels. There are four additional major remodels currently underway.”
The Company also reported that, in the absence of any substantive activities to adjust the interim business interruption insurance claim resulting from Hurricane Georges which was presented to the adjuster on December 2, 1999, the Company continues to be unable to estimate both the total claim and the time frame for the adjustment/settlement process.
Cash and cash equivalents on May 20, 2000 were $67.2 million. The Company has no cash borrowings pursuant to its $65.0 million revolving credit line under which approximately $13.6 million in letters of credit are outstanding.
Pueblo Xtra International, Inc., through its subsidiaries, operates 50 supermarkets and 43 Blockbuster Video stores in Puerto Rico and the U. S. Virgin Islands.
Statements herein, other than statements of historical information, constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, among others, statements concerning: (1) challenges in the second quarter, (2) insurance recovery expectations, and (3) the extent to which future operations may be inhibited by, and the expected period to recover from, effects of the hurricane. These statements are based on the Company’s expectations and are subject to various risks and uncertainties. Actual results could differ materially from those anticipated due to a number of factors, including but not limited to the Company’s substantial indebtedness and high degree of leverage, the Company’s limited geographic markets, and competitive conditions in the markets in which the Company operates, buying patterns of consumers, and the outcome of the claims process with insurers.
Financial information table:
PUEBLO XTRA INTERNATIONAL, INC.
(Dollars in millions)
16 weeks ended
Sales $197.1 $217.2
Earnings Before Interest,
Depreciation & Amortization(a) 17.3 21.8
(Loss) Income before income
taxes(a)(b) (1.3) 1.8
Income tax benefit (expense)(c) .5 (.2)
Net (loss) income (a)(b) ( .8) 1.6
(a) The 16 weeks ended 5/20/00 include the impact of a gain from insurance settlement ($2.5 million on Earnings Before Interest, Taxes, Depreciation & Amortization and on Loss before income taxes and $1.5 million on Net loss).
(b) The 16 weeks ended 5/22/99 include the impact of the loss on sale-leaseback transaction ($1.3 million on Income before income taxes and $1.2 million on Net income).
(c) The effective tax rate for the 16 weeks ended May 20, 2000 was 34.0% compared to 9.1% for the first quarter of the prior year. The variance is a result of the variance in tax rates among the tax jurisdictions the Company operates in and the results of operations in those specific jurisdictions.