Giant's sales plunged during drivers' strike 4th quarter affected

some stores were already suffering

February 26, 1997|By Liz Bowie | Liz Bowie,SUN STAFF

Giant Food Inc.'s store sales plunged during the five-week Teamsters strike, so it expects its fourth-quarter earnings to be "severely affected," the company said yesterday.

The announcement by the region's largest grocery chain was the first public peek into how it suffered financially from a strike by its 320 truck drivers. But Giant also reported that, even before the strike, same-store sales were down 0.2 percent for the first three quarters of its fiscal year.

Company spokesman Barry Scher said same-store sales were down because of "cannibalization" -- new stores stole customers from some of its nearby older stores. Total sales, however, were up 2.7 percent for the first three quarters.

"We are aggressively growing our company. Some stores in the new market will continue to grow, but it will take some time," he said.

Sales at stores open at least a year -- a key indicator of financial health -- were down 13.6 percent during the walkout and the two weeks afterward, compared with the year-earlier period. Same-store sales fell 6.8 percent for the 16-week fourth quarter and were down 2.4 percent for the year.

Giant reported fourth-quarter sales of $1.215 million for the period ended Feb. 22, down 3.9 percent from $1.264 million for the same period in 1995.

The fourth-quarter results were down, in part, because they were compared to strong sales in the same quarter in 1995, when blizzards sent people rushing to stores to stockpile supplies. This winter, the weather has been mild.

Scher said a 5.3 percent increase in the three-week period after the strike was evidence of a strong recovery. "We began a very aggressive promotional campaign and it is continuing to show very good results for us," he said.

Giant said earnings also will be affected by the costs of the strike. The company hired replacement workers and subcontractors to supply stores, and lost revenues from its dairy and baking operations, which were stopped for most of the strike. In addition, Giant spent extra money on sales promotions to lure back customers after the walkout.

The strike, the longest in Giant's history, ended Jan. 19, when the drivers voted to trade financial concessions for job security.

Pub Date: 2/26/97

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