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Unified Grocer's acquisition of Associated Grocers, Inc., which closed September 2007, is already paying off for the Los Angeles-based cooperative, as customer business gained in the Pacific Northwest drove more than $200 million of growth for its fiscal second quarter ended March 29.
"The consolidation of the Seattle operations into Unified is proceeding extremely well," said Alfred A. Plamann, president and c.e.o. of Unified. "We are also seeing continued strength in sales to our existing base of independent retailers, many of whom are performing quite well in the consumer marketplace.
Unified's sales were $991.9 million for the quarter, a 31.6 percent increase from last year's $753.6 million. The company attributed $201.5 million of this growth to the Associated acquisition, which occurred at the beginning of Unified's 2008 fiscal year. Continued growth in the Unified's existing customer base contributed an additional 4.2 percent in sales over the prior year.
Year-to-date sales were $2.04 billion, an increase of $509.5 million or 33 percent from last year's $1.5 billion. Unified credited $422.8 million of this growth to the Seattle operations with the remaining sales growth coming primarily from its existing customer base.
Net earnings for the quarter were $7.4 million, up from $7 million in 2007. Sales growth and improved operating performance were the primary contributors to the increase in operating income, which reached $31.4 million, up from last year's $29.8 million.
According to Unified, operating performance was aided by favorable workers compensation adjustments in its wholesale operations and profits in the Seattle Operations. The costs of the consolidation effort in Stockton along with the rise in fuel costs and volatility in the equity markets partially offset the growth in income.
Core recurring income contribution from wholesale operations improved versus the prior year, but investments in the company's distribution network, rising fuel costs, and volatility in the equity markets caused a decline operating income (to $8.9 million) and a drop in net earnings (to $1.3 million) for the quarter.
"While the investments we are making to improve our distribution network are having a short-term impact on our earnings, we are very confident that the steps we are taking will position us for growth and success over the long-term," said Plamann. "I anticipate that the earnings for Unified in 2008 will be materially in line with our excellent performance in 2007."
Unified is a retailer-owned wholesale grocery distributor that supplies independent retailers throughout the western United States. Along with its subsidiaries, Unified generated approximately $3.1 billion in sales during fiscal 2007.