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SHEBOYGAN, Wis.-- Fresh Brands Inc. reported fourth-quarter net income of $500,000, or 10 cents per share, reversing a year-ago fourth-quarter loss of $4.7 million, or 96 cents per share.
The operator of Piggly Wiggly and Dick's supermarkets said sales rose to $159.4 million period ended Jan. 1, 2005 from $152.1 million in the year-ago period. It also reported continued improvement in income from continuing operations.
"We are pleased to report our second consecutive profitable quarter. Income from continuing operations continued to show improvement since the impairment and other charges incurred in the first two quarters of 2004," said Louis Stinebaugh, Fresh Brands' president and c.e.o.
"During the fourth quarter, we launched our new 'value proposition' pricing and marketing strategy to all of our Piggly Wiggly stores," said Stinebaugh. "We are pleased with the initial impact, which has created excellent consumer awareness of the lowered pricing and had a positive impact on sales. This awareness and response is critical to the success of this strategy."
During the fourth quarter, the company's new value proposition helped increase comparable store sales for all of its corporate and franchise stores by 1.2 percent after adjusting for the extra week in fiscal 2003. "These increases are quite encouraging particularly in light of several competitive store openings in 2004 and the fact that our new value proposition was fully launched approximately one-third of the way through our fourth quarter," said Stinebaugh.
After adjusting for the extra week, comparable store sales for all of the Company's franchised supermarkets increased by 2.5 percent. Additionally, comparable store sales for the company's corporate retail supermarkets, almost half were not included in the launch of the new value proposition, decreased by 1.1 percent primarily due to new competitive stores in three of the company's markets.
Net sales for the fourth quarter of 2004 were $159.4 million, an increase of $7.3 million, or 4.8 percent, compared to the fourth quarter of 2003. The sales increase was primarily the result of the adoption of FIN 46R in the first quarter of 2004, which required the company to include 17 of its franchise entities in its consolidated financial statements, offset in part by the inclusion of an extra week in the fourth quarter of 2003. As a result, the company's net sales increased to $14.7 million.
For the year, net sales were $673.1 million in 2004, an increase of $70.6 million, or 11.7 percent, compared to 2003, an increase that was also primarily attributable to the result of the adoption of FIN 46R, offset in part by the inclusion of the extra week in fiscal 2003. The inclusion of the FIN 46R entities increased the company's total sales by $59.5 million.
Wholesale sales for the fourth quarter of 2004 decreased $9.7 million, or 7.7 percent, compared to the fourth quarter of 2003. The decrease primarily reflected the impact of the extra week in the fourth quarter of 2003. Wholesale sales for 2004 decreased $19.5 million, or 3.8 percent vs. 2003, primarily due to the sale or closure of several corporate and franchise stores in the first half of 2004.
Corporate retail sales for the fourth quarter of 2004 decreased $10.2 million, or 13.9 percent, compared to the fourth quarter of 2003 primarily due to the extra week in the fourth quarter of 2003.
Fresh Brands' corporate-owned and franchised retail supermarkets currently operate under the Piggly Wiggly and Dick's Supermarkets brands. Fresh Brands has 81 franchised supermarkets, 21 corporate-owned supermarkets and 2 corporate-owned convenience stores throughout Wisconsin, northern Illinois and Iowa.