On November 7, Weis Markets reported its 14th consecutive quarter of comparable-store sales gains, but said net income for the third quarter was down by 58.1 percent, compared to a year ago. The Sunbury, PA-based retailer reported comp-store sales gains of 1.5 percent for the 13-week period that ended September 30. Total sales were up 15 percent, to $854.3 million, compared with the year-ago results, reflecting the acquisition last year of 38 Food Lion stores in Maryland, Delaware and Virginia, plus the acquisition of one Nell’s Family Market store in East Berlin, PA. Net income for the third quarter was $4.4 million, compared with $10.6 million in the year-ago period. Weis attributed the decline to aggressive promotional and pricing programs; price deflation in produce, deli/foodservice, bakery and seafood; and inventory management challenges at some of the acquired stores. For the 39-week, year-to-date period, Weis said its net income fell 24.5 percent, to $34.8 million, on a 16.8 percent increase in sales, to $2.6 billion, compared with year-ago results. Comparable-store sales through the first three quarters were up 1.6 percent. The closely-held publicly-traded regional chain operates 204 supermarkets in seven Mid-Atlantic states. Weis also recently issued its 2016 Sustainability Report, stating that it has reduced its carbon footprint by 25.4 percent since it began measuring sustainability level in 2016. Among other milestones attained last year were: increasing recycling by more than 8.3 percent over the previous year. The company also recycled more than 25,600 tons of cardboard, 607 tons of mixed paper, 786 tons of plastic bags and 170 tons of recycled pharmacy bottles; being recognized by the EPA’s Green Chill program, which encourages reduced refrigerant usage to help lower the overall environmental impact on the ozone layer and climate change. Awards in 2016 include the 2016 Superior Goal Achievement, the 2016 Exceptional Goal Achievement, and 2013-2017 Store Re-Certification Excellence; expanding its fleet of energy-efficient vehicles, hitting its goal of leasing 30 vehicles with “clean diesel” exhaust technology and
receiving LEED Silver Certification from the U.S. Green Building Council for the company’s Fogelsville, PA store. The design features now serve as the gold standard for all future store remodels and new buildings; expanding its 1.2 million square-foot distribution center that streamlines the company’s supply chain while minimizing its environmental impact through use of an ammonia refrigeration system, and also expanding the Weis Recycling Center; committing to reduce food waste in Weis operations 50 percent by 2030 as one of five grocers for the inaugural class of the U.S. Food Loss and Waste 2030 Champions, convened by the EPA and the United States Department of Agriculture (USDA)…in the double-parking capital of the country – New York City – a new six-month test is under way that will limit curbside deliveries in certain areas of Manhattan, Brooklyn and Queens. During the morning and evening rush hours in certain areas of those boroughs, curbside deliveries from illegally parked (and double-parked) vehicles won’t be allowed. Me thinks, other than racking up larger fines and perhaps an occasional towing, most companies doing business in the City will remain generally unfazed…I recently had a chance to visit the new Save-A-Lot operating model (a corporate store on Merritt Boulevard in Dundalk, MD). My immediate first impression was that it looked just like a Lidl, which shouldn’t be surprising since the current leadership team of CEO Kenneth McGrath and chief investment officer Kevin Proctor spent most of their business careers with the German discounter. To be blunt, Save-A-Lot has a lot of work to do before they can catch up to Aldi. And while it is far bigger than fledgling Lidl in the U.S., it doesn’t have the long-term capital resources available to it that Lidl has (it’s owned by Canadian PE company Onex). Furthermore, we’ve been hearing some criticism from S-A-L licensees (which control about 70 percent of the company’s business) that the new management team is too process-oriented and inflexible to be effective. “We’re not in Europe and we don’t work for Lidl,” said one frustrated licensee. “Following the debacle that (former owner) Supervalu created, I appreciate the need for better control and improved systems, but we don’t need a bunch of programs shoved down our throats that I don’t believe are going to help us (the licensees) in an increasingly competitive channel.”…our friends at Goya announced that they have begun a 324,000 square foot expansion at the company’s North American Processing Center in Brookshire, TX. That new addition will nearly double the space of the existing Goya campus which was built in 2014. The added square footage will be used to bolster production, distribution and office functions.…Sprouts Farmers Market, the Phoenix, AZ natural and organics merchant, posted extremely strong third quarter financials earlier this month. Highlights include: earnings of $31 million, a 32 percent gain; and comparable store sales growth of 4.6 percent, and two-year comparable store sales growth of 5.9 percent; overall sales of $1.2 billion, a 16 percent increase from the corresponding period last year. The perishables-oriented merchant expects to open 30 new stores next year. In addition to its previously announced Ellicott City, MD debut, the company finally confirmed that it will expand into Pennsylvania in 2018. And while it would not specify store locations, we feel confident in our previous reporting that Sprouts will open in a new major commercial development in Philadelphia – (Broad Street & Washington Avenue) – and in the Moorestown, NJ Mall where it will occupy some of the space of previous tenant Macy’s…it’s been quite a month for Hanover, PA-based Utz Quality Foods. First, the fast-growing snack foods manufacturer agreed to acquire Inventure Foods, Phoenix, AZ, for approximately $165 million in cash, which includes the assumption of approximately $75 million in Inventure debt. Inventure makes company-branded and licensed snacks under such brands as Boulder Canyon, Nathan’s Famous and TGI Friday’s. Then, within days, the company revealed it was also buying out the minority stake (believed to be just over 20 percent) made by private equity investor Metropoulos & Co. just over a year after the investment firm took a minority interest in the family-owned snack maker to help complete its purchase of Alabama-based snack food manufacturer Golden Flake Foods. It was thought at the time that Utz could utilize Metropoulos’ expertise in the food and beverage industry (Hostess, Pabst, Bumble Bee) and its financial acumen to help the snack food firm with its strategic direction and future acquisitions. According to chief executive Dylan Lissette, that wasn’t necessarily so. While not wanting to disclose much, the 45-year old CEO said that Metropoulos’ interest in the Utz was never to be interpreted as a must have long-term marriage, but confirmed that Metropoulos’ investment was an important one at the time of the Golden Flake deal as Utz was looking for both capital and expertise and Metropoulos was able to provide exactly that. In a short time, Utz was able to dramatically improve earnings and set in place the proper future structure for continued growth. Lissette detailed how the company has restructured its senior leadership team over the past year and has also re-evaluated its future financing needs and growth plans. He added that while Utz is adding more debt to its balance sheet to accomplish these core objectives, it can still maintain its healthy expansion objectives while using the sales growth of its newly acquired companies and the synergy savings from those purchases to continue to seek more growth and success – both organic and via M&A. In addition, the Rice-Lissette family will own 100 percent of the company. When Lissette began with Utz 22 years ago, the firm was doing about $105 million in sales; it will exceed $850 million in sales next year with this acquisition and will be very close to becoming the third largest branded snacking company in the U.S. Also, according to Lissette, Utz has improved its core metrics each year for the last five years, showing the strength of the Utz platform. It’s been a very strong run for Lissette since he was named CEO in early 2013. Besides the Golden Flake and Inventure deals, the company has acquired Dirty & Zapp’s, Bachman, Good Health, Keystone Pretzel Bakery, Condor Snacks and some distribution centers from Shearer’s Snacks in Ohio. While Lissette is relatively quiet, and flies under the radar, I’d be careful not to bet against him…Justin Dye, former chief administrative officer at Albertsons, has joined financial advisory firm and investment bank Peter J. Solomon Co. as a senior advisor in its food retail and restaurant group. Great to see Justin, one of the brightest and most talented young executives in the business, back in the saddle…a tip of the hat to our buddy Fred Morganthall, who is retiring as executive VP retail operations for Kroger at the end of this month. As many of you know, Fred served as president of Harris Teeter from 1997 to 2013, when Kroger acquired the Matthews, NC-based regional chain. He then joined the parent firm, first as a senior VP then to his current role in 2015. All told, Fred spent 44 years in the grocery biz. He leaves with a stellar reputation and served as a great mentor to many people and a wonderful ambassador for the industry. A true first ballot Hall of Famer, I wish him all the best in his future endeavors…from the obit desk this month, I’m sad to report the passing of Dave McElroy, former executive for Golden Grain Inc. (now part of Quaker). You may never have heard of Dave, but on a personal level, he not only served as a mentor to Dick Bestany and me when we worked for The Griffin Report in Boston, he served as a key advisor to us when we moved to Maryland and acquired Food World in 1978. I’ll miss Dave’s generous heart and wonderful sense of humor…also passing on recently was Kay O’Hare, 92, mother of food broker Chip O’Hare and grandmother of Matt O’Hare, JOH. Another memory from my New England past, Kay and her husband Harry, founder of JOH, were two of the nicest people I’ve met, dating back to when I began my food industry career in 1973…I was also shocked to hear about the death of pitcher of Roy Halladay, the perennial All-Star pitcher, who was piloting his own plane in Florida when it crashed earlier this month. Halladay, 40, had a great 16-year career (with the Blue Jays and Phillies), winning the Cy Young award twice, being named to eight All-Star teams and pitching only the second no-hitter in post-season play (against the Reds in the 2010 NL division series; Don Larsen’s perfect game in the 1956 World Series was the other) and also throwing a perfect game of his own in 2010 (only the 20th “perfecto” in MLB history at the time). Halladay is certainly a borderline Hall of Famer (203 career wins) who was greatly respected by his teammates…finally, another great music legend has passed. Antoine “Fats” Domino, an early rock & roll pioneer and one of the greatest piano players in popular music, died late last month at the age of 89 not far from his New Orleans birthplace. His boogie-woogie style of piano playing was off the charts and was the foundation of almost every big hit Domino ever recorded, including “Blueberry Hill,” “Ain’t That A Shame,” “I’m Walkin’” and “Blue Monday.” In a seven-year period in the late 50s and early 60s, Domino sold 65 million singles and had 23 gold records. He was inducted into the Rock & Roll Hall of Fame as part of the inaugural class in 1986…gott- have holiday item for 2017? The answer is clear – Stove Top Thanksgiving Dinner Pants. Obviously created for the “I’m going to need to go on a diet after Thanksgiving and Christmas” crowd, this creative new item is described as “comfortable, stretch-waisted pants with a little bit of Stove Top style.” These ridiculous – I mean, unique – looking pants also feature an over-the-belly (“Stuffin’-Stretch”) waistband that allows you to ‘eat in’ embellished with iconic Stove Top stuffing imagery and complimented by XXL stuffing print pockets.” And who said that Kraft has lost its creative edge?