Giant posts 16.6% gain in net income Company plans to open 8 or 9 more stores

June 05, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

Giant Food Inc. reported yesterday a 16.6 percent increase in first-quarter net income.

The Landover-based supermarket chain said it earned $25.78 million, or 43 cents per share, compared with $22.1 million, or 37 cents per share, over the same period last year.

"We have every reason to be pleased," said Senior Vice President David B. Sykes.

Analysts concurred: "It sounds to me like they probably enjoyed some gross margin expansion and continuing control on their costs," said Kurt Funderburg of Ferris, Baker Watts Inc.

Giant sustained growth by keeping expenses in order, making a larger profit on sales and simply selling more goods.

Giant sales rose 3 percent to $895.6 million for the quarter, compared with $869.2 million over the comparable period. But sales in stores open at least a year, a key gauge of performance also called same-store sales, were practically flat, inching up .2 percent for the quarter.

The company attributed the modest gain in same-store sales to the weak economy in metropolitan Washington, which accounts for more than 60 percent of the 165-store chain's business. In addition, Giant opened four stores from November to January, which officials say "cannibalized" sales at older, nearby stores in Northern Virginia and Maryland.

But the retailer hasn't been dissuaded from building more. Plans are set to open eight or nine stores before the end of February 1997, including five in New Jersey and two in Pennsylvania, both part of its push into what the retailer calls the "northern" territory. Stores are also scheduled to open in Alexandria, Va., and Eldersburg.

Giant's expansion is all the more impressive, analysts say, because other retailers continue to suffer in an industrywide shakeout: Sizzler International Inc. of Los Angeles just announced it was filing for Chapter 11 bankruptcy protection, shutting down 13 stores in the area. Merry-Go-Round Enterprises Inc., the fashion chain based in Joppa, went out of business earlier this year.

Pub Date: 6/05/96

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