Same Store Sales up 2.4 Percent
Board Approves Additional Stock Repurchase
SALISBURY, NC Food Lion, Inc. (Nasdaq: FDLNA, FDLNB) reported today that the Company’s second quarter earnings of $68.4 million increased 14 percent over earnings of $60.0 million in the second quarter of 1998. Basic earnings per common share were $0.14. The Company reported continued strong same store sales, which increased 2.4 percent during the quarter.
The Company’s sales for the quarter were $2.5 billion, an increase of 7 percent over sales during the same quarter last year. After accounting for changes in the recording of sales tax related to the Company’s loyalty card program, total sales were up 8 percent, on a comparable basis.
“We are pleased with our continual rise in sales, including one very important measure of success, same store sales,” said Bill McCanless, President and Chief Executive Officer. “The Company continues to successfully maintain operating costs that are among the lowest in the industry, and we are steadily improving gross margin through the expertise of our category management efforts.”
Today, the Board of Directors refreshed the Company’s share repurchase program with a total authorization of $100 million for the repurchase of Class A and Class B stock. During the second quarter, Food Lion repurchased $69.5 million of Company stock, representing approximately 4.4 million Class A shares and approximately 2.8 million Class B shares. Food Lion will continue to repurchase stock throughout the year, as appropriate in the best interest of shareholders.
Food Lion recorded an after-tax charge of $2.0 million related to executive post-employment benefits. Excluding the one-time charge, earnings would have been $70.4 million for the quarter, an increase of 17 percent over the same period last year.
The Company continued to grow with the addition of 31 new Food Lion stores, including the relocation of eight existing stores. Food Lion opened supermarkets during the second quarter in Harrington, Del.; Augusta and Chickamauga, Ga.; Hopkinsville, Ky.;
Cumberland, Edgewood and Prince Frederick, MD.; Apex, Boone, Charlotte, Greenville, Morganton, Moyock, Raleigh, Sedalia, Smyrna, Summerfield and Winston-Salem, NC; Garden City and Myrtle Beach, SC; Hendersonville, TN.; Charlottesville, Dillwyn, Forest, Fredericksburg, Harrisonburg, King George, Lovingston, Portsmouth, Rustburg and Suffolk, VA. The Company remodeled 43 supermarkets during the quarter. In the second quarter, Food Lion’s Kash n’ Karry subsidiary opened one supermarket in Orlando, FL. and remodeled one store. The Company expects to open a total of 41 additional new stores during the remainder of the year.
The conversion of Kash n’ Karry in-store pharmacies to The Medicine Shoppe brand pharmacies is on schedule, with 36 of the conversions completed to date. The remaining 11 pharmacies are expected to be converted by mid-July, giving customers access to one of the most trusted names in the pharmacy business at Kash n’ Karry’s convenient locations.
With 1998 sales of $10.2 billion, Food Lion is one of the nation’s largest supermarket chains. The Company and its more than 92,000 employees serve more than 10 million customers a week at 1,155 Food Lion supermarkets in 11 states and 92 Kash n’ Karry supermarkets in West Central Florida.
Safe Harbor Statement Regarding Forward-looking Information or Statements
This document contains forward-looking statements that involve uncertainties. Factors that could cause results to differ materially from those in the forward-looking statements are detailed from time to time in reports filed by the Company with the SEC, including Forms 8K, 10Q and 10K
Contact: Chris Ahearn (704) 633-8250, Ext. 2892