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Stater Bros. reports Q3 results

BY Allison Cerra

SAN BERNARDINO, Calif. Stater Bros. Holdings reported mixed results for its third quarter late Tuesday.

Sales for the 13 weeks ended June 28 decreased 0.43% to $928.6 million, compared with $932.7 million for same period last year. The Easter holiday fell in the second quarter of fiscal 2008 and in the third quarter of fiscal 2009. After taking into consideration the timing effect of the Easter holiday, like store sales decreased 1.81% for the 13 weeks ended June 28.

Total sales for the 39 weeks ended June 28, 2009, increased $17.8 million or 0.64% and amounted to $2.82 billion, compared with $2.80 billion for the same period in fiscal 2008. Year-to-date like store sales increased 0.09% in fiscal 2009 compared with the same period in fiscal 2008.

The company reported net income of $15.1 million and $9.2 million in the third quarters of fiscal 2009 and fiscal 2008, respectively. Net income for the fiscal year-to-date periods amounted to $29.8 million in 2009 and $33.5 million in 2008.

Brown said, “We are pleased with our operating results for the quarter and the first thirty-nine weeks of our fiscal year,” said Jack Brown, chairman president and CEO of Stater Bros. Markets. “During these tough economic times, we remain committed to assisting our ‘valued customer’ by providing them the best possible purchasing value for their shopping dollar and by providing friendly service and a satisfying shopping experience on each and every one of their visits to our Supermarkets.”

Stater Bros. Holdings is the largest privately held supermarket chain in Southern California and operates 167 supermarkets through its wholly owned subsidiary, Stater Bros. Markets.

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Report: Bashas’ shuttering 14 stores

BY Allison Cerra

CHANDLER, Ariz. Almost one month after filing for bankruptcy protection, the 15th largest privately owned supermarket chain in the country will close 14 underperforming stores.

Bashas’ food stores said it plans to close 14 underperforming stores as part of its Chapter 11 bankruptcy filing.

The company has retained $45 million in financing to fund ongoing operations. Bashas’ plans to continue operating all of its brands, including Food City, which caters to Hispanic shoppers, and high-end grocer AJ’s Fine Foods.

Bashas’ president and COO Mike Proulx said in a release the company needs to close some underperforming stores along with stores in newer areas that didn’t grow or develop.

Bashas’ wants to close 10 stores in metro Phoenix and one store each in Winslow, Tucson, Marana and Willcox by Oct. 10.

The company said it is working to place as many employees as possible affected by the closings at other locations.

“We made this bold move to help preserve the business and the jobs of our more than 10,000 employees,” Bashas’ president and CEO Mike Proulx said last month of the bankruptcy filing. “We did this to improve the health of the company as we navigate through difficult economic times.”

 

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On Target: More pharmacies and a low-price promise

BY Mike Troy

SPRING HILL, Fla., and , BRONX, N.Y. —Target expanded its pharmacy presence last month with the opening of 23 new stores nationwide, and extended a bold pricing promise to more aggressively combat Walmart’s assertion that its prices are “unbeatable.”

The addition of 23 new stores, 17 of which feature an expanded fresh food offering, gives Target a total of 1,719 stores nationwide and pushes its pharmacy total to 1,562 units. While that milestone is noteworthy, and pharmacy remains a strategic priority for the company, it is the expansion of food and the stronger stand on pricing that are seen as more significant strategic initiatives even if they are complementary to strategies already established in pharmacy.

Target is out to increase customer traffic in its stores, while simultaneously overcoming the perception among some customers that it isn’t as sharply priced as Walmart.

Expanding the presence of food and consumables is an obvious measure to generate increased customer traffic, and Target took an important step in that regard when it introduced a discount store format called Pfresh, which, as the name implies, includes perishable products. At a new 135,000-sq.-ft. store in Spring Hill, Fla.—an hour north of Tampa—the Pfresh format is on display and quite attractive. The fresh presentation is compelling enough that customers unfamiliar with the much larger SuperTarget concept may think they are in one.

As of the end of the first quarter, Target’s plans call for Pfresh to be in about 100 stores by year’s end, and if it’s deemed to be working, from 2010 most new and remodeled stores will feature the expanded food offering.

Beyond simply adding food, another experiment apparently expanded during July at new stores is Target’s “low price promise.” At multiple locations inside two new stores visited by Drug Store News, Target called out the promise with signing on endcaps at each checkout lane and in the large food and consumables area where Target is most eager to get credit for prices it contends are competitive with those found at Walmart. The pricing promise was tested earlier this year at stores in Orlando, Fla., Denver and Minneapolis, and allows Target to match prices on advertised items from nearby stores.

New messaging around pricing and expanded food offerings is intended to generate more traffic, which ultimately should benefit the pharmacy and healthcare businesses, which are among Target’s best-performing segments. Target already offers a differentiated experience in addition to being competitive with its $4 generic offering, and now it is poised to benefit from more customers being exposed to its prescription and healthcare offerings.

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