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STELLARTON, Nova Scotia - Canada's No. 2 grocery chain, Sobeys Inc., reported a rise in fourth-quarter profit on Wednesday, aided by higher sales and cost cuts, Reuters reports.
Sobeys, which operates the Sobeys, Garden Market, IGA and Price Chopper chains, reported operating earnings of C$37.2 million ($24.6 million), or 56 Canadian cents a share, in the quarter ended May 4, compared to C$25.4 million, or 39 Canadian cents a share, in the fourth quarter of last year.
Sales at Sobeys, which sold its Serca food and paper products supply business for C$440 million in early December to focus on its grocery and in-store pharmacy operations, rose 6 percent to C$2.42 billion from C$2.29 billion. The company said it made an after-tax gain of C$80.7 million on the sale of Serca during the quarter.
Sobeys said it expects to expand sales between 6 percent and 8 percent in fiscal 2003, adding that earnings growth should be twice the rate of sales growth.
"We have taken decisive action to significantly improve our national and regional merchandising effectiveness, reduce distribution costs, streamline operating and administrative expenses, and execute an aggressive capital spending program," Bill McEwan, president and chief executive, said in a statement. He said capital spending should reach C$600 million in 2003. He also said 55 new corporate and franchised stores opened during fiscal 2002, including 15 in the fourth quarter.
McEwan said he expected continued growth in sales and earnings from positive same-store sales, sustainable operating cost savings, margin enhancement initiatives, and continued modernization and expansion of the company's store network.