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SHEBOYGAN, Wis. - Fresh Brands, Inc. posted a $23.7 million, or 17 percent net sales gain, during its second fiscal quarter ended July 17.
Income from continuing operations was $0.1 million, compared with $2.1 million for the same period in 2003. Income from continuing operations per diluted share was 2 cents for the second quarter of 2004, compared with 41 cents for the second quarter of 2003.
The increase in sales was primarily the result of the adoption of "FIN 46R" in the first quarter of 2004, which required the company to include 16 of its franchise entities in its consolidated financial statements. The inclusion of these FIN 46R entities increased the company's net sales by $14.5 million. Net sales also increased by $9.5 million as a result of a corporate comparable-company-store sales increase of 7.1 percent; the opening of a new Piggly Wiggly supermarket in Racine, Wis. in September 2003; and the opening of a new Dick's supermarket in Maquoketa, Iowa in January 2004.
Comparable-store sales for the company's owned and franchised supermarkets increased 6.3 percent in the second quarter of 2004, compared with the second quarter of 2003.
"Our strong increase in comparable-store sales shows that our continued intensive promotional activities and re-emphasis on our in-store value proposition are working," Louis Stinebaugh, Fresh Brands' president and c.e.o., said in a statement. "As expected, our customers are responding to our new strategic focus. We believe that we are still on course to realize the full benefits of our efforts beginning in 2005."
In addition, Stinebaugh said, competitive store closings in several markets helped drive comparable-store sale increases during the second quarter.
For the first two quarters of 2004, net sales were $359.5 million, a 15.6 percent increase over the sales of $310.9 million for the prior year. The company realized a loss from continuing operations of $0.8 million, or 16 cents per diluted share, for the first two quarters of 2004, compared with income from continuing operations of $4.6 million, or 90 cents per diluted share, for the same period last year.
During the second quarter Fresh Brands closed five corporate stores in May 2004 and entered into agreements to sell three remaining corporate Piggly Wiggly stores in Illinois. The company said it will continue to supply two of these stores as franchise Piggly Wiggly supermarkets. The $2.2 million loss from discontinued operations, or 46 cents per diluted share, reflects the closure costs and operating losses related to these stores.
"Our decision to sell these stores is consistent with our renewed focus on our consistently profitable wholesale business," noted Stinebaugh, adding, "We will continue to evaluate our corporate supermarkets to determine whether they could be more effectively operated as franchised supermarkets."