Giant profits rose 4.7% in 3rd quarter

November 23, 1994|By Jay Hancock | Jay Hancock,Sun Staff Writer

Continuing to fend off Wal-Mart, Kmart and other expanding, "non-traditional" food sellers, Giant Food Inc. said yesterday that profits in the third quarter rose by 4.7 percent.

The company, the biggest grocery chain in the Baltimore/Washington region, also disclosed that British supermarket tycoon David Sainsbury and two executives from a New England grocery chain will become directors.

Giant earned $18.6 million for the three months that ended Nov. 5 on $834.8 million in sales. Sales rose by 4.5 percent, helped by a new store in Delaware. Per-share profit increased to 31 cents from 30 cents.

Sales in stores open for at least a year rose by 0.9 percent. But if new Giant stores weren't stealing sales from older ones, same-store sales would have risen by 1.5 percent, the company said.

The results are vintage Giant, one analyst said: steady but unspectacular.

"Being the dominant store in this region, it's hard for them to expand their store base without cannibalizing existing stores," said Kurt Funderburg, a retail analyst with investment house Ferris, Baker Watts Inc.

Landover-based Giant is trying to grow by opening stores to the north, outside its home base. It said yesterday that it intends to open five more of its Super G stores in the Philadelphia-Delaware region by the summer of 1996. Earlier this year it opened its first Delaware store, in the town of Bear.

The company also said it plans to open five stores in the Washington area and one in the Baltimore area in that time.

The naming of three new directors to Giant's seven-member board results from the sale of a big chunk of stock on Nov. 14. As previously reported, the Lehrman family sold 9.8 million Giant shares for $325 million to J. Sainsbury PLC, a large supermarket chain based in Britain. Included in the sale were voting shares carrying the right to elect three directors.

Sainsbury Chairman and Chief Executive David Sainsbury will fill one of the seats. The other two will be taken by executives from Shaw's Supermarkets Inc., a New England chain owned by J. Sainsbury.

Dino Adriano, one of the executives, is a J. Sainsbury director and deputy chairman of Shaw's. The other, Harry Beckner, is a director of Shaw's.

The Sainsbury-appointed directors won't be able to direct Giant policy on their own. The company's other four board seats are controlled by Israel Cohen, Giant chairman and CEO.

But analysts expect the three new directors to push Giant to grow more quickly and to adopt some of the same strategies that Shaw's has, such as increasing house-label brands.

For the nine months that ended Nov. 5, Giant earned $53.6 million, a 2.5 percent decline, not counting a one-time accounting change that artificially boosted results in 1993. Sales for the nine-month period were $2.49 billion, up 3.4 percent.

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