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SHEBOYGAN, Wis. - Fresh Brands Inc. today reported sales of $152.6 million for its third quarter ended Oct. 4, 2003, which represents a 7.6 percent increase over last year's third-quarter sales of $141.9 million.
The company cited the opening of a new replacement corporate store in Sheboygan, Wis., the opening of a new Piggly Wiggly corporate store in a former Rainbow Foods Store in Racine, Wis., the consolidation of the Menasha, Wis., corporate Piggly Wiggly store into a former Cub Foods store, and the opening of a franchise replacement store in Juneau, Wis., as reasons for its sales boost.
The third-quarter sales also included $2.0 million in sales as a temporary wholesale supplier to a group of local supermarkets, which has since been terminated.
Net earnings were $1.02 million, a decrease of 29.4 percent from earnings of $1.44 million for the same period in 2002. Diluted earnings per share for the third quarter of 2003 were $0.20, a decrease of 28.6 percent compared to diluted earnings per share of $0.28 for the third quarter of 2002.
The company said retail sales for the third quarter of 2003 increased 10.5 percent to $77.0 million, compared to retail sales of $69.7 million for the same period in 2002. Net wholesale sales for the third quarter of 2003 increased 4.8 percent to $75.6 million from $72.2 million in the third quarter of 2002.
Comparable store sales for the Piggly Wiggly franchise and corporate retail chain and Dick's Supermarkets increased 4.3 percent in the third quarter.
"Our decreased earnings for the third quarter reflect a combination of factors. These include increased promotional spending for the opening of the new stores and to drive sales in a very competitive environment, an incremental charge of $335,000 for potentially uncollectible franchise receivables, and $350,000 of professional fees related to the pursuit of several acquisitions that ultimately did not occur," said Elwood F. Winn, president and c.e.o. of Fresh Brands.
"Although our selling, general, and administrative expenses were higher for the quarter, they were down as a percentage of sales. SG&A expenses were 16.2 percent of sales in the third quarter of 2003, compared to 16.7 percent for the same quarter last year, in spite of the additional promotional expenses and professional fees," said Winn.
As part of the company's ongoing efforts to reduce operating expenses, Winn said the company has implemented a program to reduce staffing costs by approximately $1.3 million on an annualized basis, which includes the recently announced elimination of positions in the company's office, warehouse, and distribution facilities in Sheboygan and additional staffing reductions through attrition and retirements.
Pointing to the difficult economic climate, intense competition, and the length of time since its last successful acquisition in June of 2001, Winn said Fresh Brands would not meet its goal of increasing sales by 15 percent in 2003. As a result, the company will intensify its efforts to improve the results of our current operations, Winn said, noting that the company will continue to evaluate its various competitively challenged corporate and franchised supermarket locations.