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LOS ANGELES -- Arden Group, Inc. said yesterday that its fiscal 2004 year proved too hard to beat in fiscal 2005. The company, the parent of Gelson's Markets which operates 18 full-service supermarkets in Southern California, said sales were $470,354 in 2005 compared to $502,898 in 2004, a decrease of 6.5 percent. In 2004, the labor dispute affecting other supermarkets in Gelson's trade area had boosted Gelson's own performance at the time.
Sales were negatively impacted for three weeks during 2004, as the Century City store was closed due to construction at the century City Shopping Center, the company added. Sales at the Century City store were also negatively impacted in 2005 as a result of ongoing construction near the store.
For the year, operating income decreased to 6.8 percent of sales, 6.9 percent in 2004. Arden Group said it achieved significant economies of scale in fiscal 2004 on incremental sales during the labor dispute. These economies were partially offset by approximately $2,200 of bonus expense recognized and paid in 2004 to the Company's union employees who belong to the United Food and Commercial Workers' Union, as well as higher compensation expense in 2004 related to the company's SARs program and higher gross margins in 2005 due to a combination of cost reductions and product pricing decisions. During 2005, the Company recognized $946 of SARs compensation expense compared to $3,658 in 2004.
For the fourth quarter of fiscal 2005, sales increased 1.6 percent compared to the same period of 2004. The latest quarter of 2005 included Rosh Hashanah and Yom Kippur sales, which had occurred in the third quarter of 2004.
Operating income as a percent of sales was 6.2 percent in the fourth quarter of 2005 compared to 4.8 percent in the same period of 2004, primarily due to lower compensation expense in 2005 related to stock appreciation rights, the company said.