After Record Year Of Growth, Weis Remains Bullish On Future

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The past 12 months proved to be the busiest period in Weis Markets’ 105-year history. The Sunbury, PA merchant acquired 44 stores and, after remodeling, reopened all of them within 96 days. The acquisition of five Mars Supermarkets, 38 Food Lion units and one Nell’s Market were part of a total of 146 projects the company’s store development team completed last year.

And according to Weis chairman and CEO Jonathan Weis the momentum is continuing during the first three months of 2017. Weis, along with COO Kurt Schertle and senior VP-merchandising & marketing Richard Gunn addressed nearly 700 vendors at the regional chain’s annual vendor strategic alignment summit meeting held earlier this month in Hershey, PA.

“I’m happy to re-emphasize what I said at our last strategic alignment meeting in 2016: Weis Markets remains a buyer, not a seller. We’ve proven that point over the past 12 months,” Jonathan Weis asserted.

He added that the company co-founded by his grandfather in 1912, will continue to invest in its growth this year with a $100 million cap-ex budget that will include 14 remodels, two gas stations and a major distribution center expansion.

“As a result of our acquisitions, we have completed several years’ worth of growth in one. This allows us to compete in new markets and it makes us a bigger customer and a more valuable account for your business,” Weis proclaimed when addressing a packed house of suppliers, distributors and food brokers.

Along with Jonathan Weis, chief operating officer Kurt Schertle is one of the drivers of Weis’ recent success. In his remarks, he provided the vendors with an overview of the market landscape and how Weis plans to continue to upgrade many of its systems and operations to remain ahead of the competitive curve.

The 45-year old industry veteran noted recent key industry changes have included the Ahold-Delhaize merger (which is heading toward a more decentralized organization); the effects of Albertsons Safeway acquisition and regional consolidation and the shifting priorities away from retail at Supervalu. He also noted the growing impact of online competition and mobile ordering where studies have suggested that as much as 40 percent of all center store and non-food items will be purchased via the Internet by 2025.

Schertle told the vendors it was important that Weis step up its online presence, remain competitive with price-driven merchants such as Aldi, Wal-Mart and the soon-to-be new market entry, discounter Lidl (Weis is currently offering 180 “Valu Time” products comparable in price to its discount competitors). He also noted Weis’ priority to remain on trend both with category growth and store improvements. At the store level those upgrades include additional beer and wine cafes (50 currently exist), which was aided by a change in Pennsylvania law that allows food retailers to sell wine in its stores.

The former Supervalu executive, who began his career at the old Metro Food Markets/Food Basics banner in Baltimore, was particularly proud of the effort of the company’s associates in completing the conversion of its 44 newly acquired stores last summer and fall. “Associates from every part of the company played a key role in these conversions – IT, store support and supply chain. Our store development team also played an important role,” Schertle declared, adding that more than 2,500 additional associates were hired and trained to accommodate the growth initiative.

Looking forward to the remainder of this year, Schertle said the company will focus on the overall customer experience while also adding productivity “enhancements” in all its stores. He also reviewed gains made in Weis’ pharmacy operations where sales grew an impressive 8.3 percent at its 138 in-store pharmacies. “Pharmacy is an overall sales builder through health and wellness promotions,” Schertle affirmed.

He was pleased with Weis’ gains in sales and earnings last year. With 44 new stores added to the fold, obviously revenue would increase significantly, but Schertle pointed to the retailer’s comp store sales for the year which were up 2.9 percent (significantly better than most of its industry peers) while net income also grew 46.6 percent. In a very difficult economic climate where deflation created a big hurdle to match comps from previous years, Weis achieved its third consecutive year of increased comp store sales. When assessing overall company sales (which were $3.1 billion last year), Schertle felt that once the new stores have been fully absorbed into Weis’ revenue stream coupled with the company’s ongoing solid same store sales performance, Weis’ total annual revenue will be in the $3.6 billion range by the end of the year.