Giant's profit cut by 5-week strike Chain has $85 million in earnings for year

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

A five-week strike by Giant Food Inc.'s truck drivers last winter sliced the company's profits in half for the period that ended Feb. 22, compared with the previous year.

Nevertheless, the Landover-based grocery store chain made money in its fiscal fourth quarter and still had margins that were respectable for the grocery industry.

The region's largest chain posted net income of $17.7 million, or 29 cents a share, for the 16-week period compared with $44.9 million, or 75 cents a share, for the same period in the previous fiscal year.

Earnings for the 1997 fiscal year were $85.5 million, or $1.43 a share, compared with $102.2 million, or $1.72 a share, for the year before.

"Was the strike worth it? It was necessary. It had to happen," the company's president, Pete L. Manos, said. "Certainly no one wins in a strike, but it was a question of whether we would manage our business."

The company reported a margin of 1.46 percent for the period, significantly down from its more normal margin of 3.55 percent for the same period in 1996.

"All preliminary indicators seem to be telling us that they are rebounding quite strongly," said David J. Callahan, editor of Food World, an industry trade publication. "It is not as bad as people anticipated."

A margin of 1.5 percent is about the industry average, Callahan said. So while 1.46 percent is far below Giant's usual performance, it is still considered respectable.

The company said a mild winter also contributed to the reduction in sales and earnings. A cold, snowy winter in 1995-1996 meant that customers ran to the store more often to stock up on groceries than they did this past winter. But Manos did not attribute the reduction to competitive pressure from other store chains.

Giant's total sales for the year increased 0.5 percent, to $3.98 billion from $3.86 billion in fiscal 1996.

Sales at stores open a year, a key indicator of a retailer's health, were down 2.4 percent for the year and 6.9 percent for the quarter.

Teamsters Local 639 went on strike Dec. 15 for five weeks over the issue of whether Giant could hire subcontractors to haul products to its grocery stores. The Teamsters drive the products from the warehouse in Landover to the stores and wanted to continue to do so. But Giant said it could be more efficient to use wholesalers to deliver products as it expands into Pennsylvania, Delaware and New Jersey.

The strike was settled after the company gave the truck drivers lifetime job security in return for some flexibility in the use of wholesale suppliers.

Pub Date: 3/26/97

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