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Net sales at Roundy's Inc. increased 1.1 percent to $984.2 million in the third quarter ending Sept. 28 of the grocer's 2013 fiscal year.
“During the third quarter, our core market stores continued to be impacted by the effects of both competitive square footage growth over the last four quarters and the weak economy,” said Robert Mariano, Roundy's chairman, president and CEO. “In addition, we incurred an unusual amount of incremental marketing and advertising expenses associated with our Milwaukee Renewal effort and higher promotional activity. Despite these headwinds, our sales cadence improved throughout the third quarter and this has continued into the fourth quarter. These results give us confidence that our customer centric initiatives are resonating with consumers and we believe we are making the right long term decisions in order for us to stabilize our core markets and position us more positively heading into 2014.”
The Q3 sales boost of $10.6 million over the year-ago period primarily reflects the benefit of new stores, partially offset by a 3.7 percent decrease in same-store sales and the effect of three stores closed during 2013. Roundy's chalks up the same-store sales dip to a 4.7 percent decrease in customer transactions, partially offset by a 1 percent increase in average basket size. "Same-store sales were negatively impacted by competitive store openings and the weak economic environment that continues to impact customer demand in the company’s core markets," the company reported.
Year to date, net sales have increase 1.4 percent to nearly $2.95 billion.
Q3 adjusted net income was $3.2 million, or 7 cents per common share, compared to $8.8 million, or 20 cents per share, a year ago. YTD adjusted net income was $25.3 million, or 56 cents per share, compared to $38.3 million, or 89 cents, a year ago.
“In our Chicago market, we continue to be pleased with the strong sales and profitability trends of our Mariano’s banner," Mariano said. "We recently opened two additional stores after the end of the third quarter, which brings our total count of Mariano’s stores to 13, with 5 of the stores in the city of Chicago and 8 in suburban locations. We are on track to open an additional 5 stores in 2014 for a total of 18 Mariano’s locations.”
Q3 gross profit increased 0.8 percent to $253.1 million, from $251.2 million in the same period last year. Operating and administrative expenses increased to $234.9 million, from $225.9 million in the same period last year. Operating and administrative expenses as a percentage of net sales increased to 23.9 percent in Q3, from 23.2 percent a year ago, primarily due to increased marketing costs related to the rollout of the company’s Fresh Perks and Milwaukee renewal marketing campaign, increased bonus expense, increased occupancy and labor costs related to new stores as well as reduced fixed cost leverage in the company’s core business resulting from lower sales.
Founded in Milwaukee in 1872, Roundy’s operates 163 retail grocery stores and 101 pharmacies under the Pick ’n Save, Rainbow, Copps, Metro Market and Mariano’s retail banners in Wisconsin, Minnesota and Illinois.