Weis Markets continues to roll. The Sunbury, PA regional chain, which is celebrating its 100th anniversary in 2012, posted another strong sales and earnings quarter while also telling shareholders that the next 12 months should continue the forward momentum that the chain has enjoyed since 2009.
Speaking at the Weis annual meeting on April 26 at the retailer’s corporate offices, vice chairman Jonathan Weis noted that, despite a very competitive marketplace and a continuing poor economy, Weis continues to prosper.
“Despite these challenges, we are pleased to report our company had another strong year. In 2011, our net income increased 10.7 percent while our comparable store sales increased 4.2 percent. This represents our third consecutive year of strong results,” Weis stated.
“At a time when other companies are cutting back or closing stores, we continue to reinvest significantly in our stores, IT infrastructure and our organization at an unprecedented rate,” he added. In 2011, we invested $100 million in our growth initiative. Over the past three years, we’ve upgraded more than 100 of our stores.”
Weis also said that the company plans to invest a record $125 million in its growth – a 25 percent increase compared to 2011. The cap-ex plan includes two new stores (Fogelsville, PA and Selinsgrove,PA) and 18 major remodels.
Not included in those new store initiatives are threePhiladelphiaarea Genuardi’s stores –Conshohocken,PA;Doylestown,PAandNorristown,PA– that Weis will acquire from Safeway. That deal is scheduled to close on June 11 and the refurbished units should reopen within a week.
Also as part of Weis’ growth plan, the regional retailer said it is in the process of securing three former A&P (Super Fresh) locations -Hillsborough,NJ,Towson,MDand Woodlawn MD – which should open in 2013.
“Our ultimate goal is disciplined growth,” Weis explained to the company’s shareholders. “The kind that will allow us to profitably increase our market share and position us for strategic acquisition opportunities. As a company that is proudly marking its 100th year of continuous operation, we are a forward looking company and determined to grow. We are very proud of the generations of Weis associates who helped build our company and are thankful for their many contributions. We are also proud of our current organization of many talented individuals. I am also proud of my family’s role in our growth.”
Weis detailed some historical highlights of the company’s first 100 years and gave a special salute to his father, Robert Weis, chairman, who opened the annual meeting.
“My family’s retailing tradition dates back to the 1880s when my great-grandfather operated a general store inSelinsgrove,PA.My grandfather Harry and Uncle Sigmund followed him and opened our first store here in Sunbury. In the years that followed they opened stores throughout Central Pennsylvania. My father’s tenure with our company has spanned the Great Depression,World War II,Vietnamand other world events. As a young boy he worked the register, bagged produce and delivered groceries. Later in his career, he would oversee our company’s development program and finances. His career has been one of sustained accomplishment and quiet excellence. We are proud of his many contributions to our company,” Jonathan Weis noted.
Next up was president and CEO Dave Hepfinger, who noted that the reatiler’s journey over the past four years has been focused on growth and improvement.
“During this time, we’ve challenged our people like never before – and while we have more to do – we are proud of their achievements,” Hepfinger stated. “In 2011, we achieved record results. For the third consecutive year, we posted strong net income and operating income increases. As noted earlier our net income increased 10.7 percent to $75.6 million while our earnings per share increased $.27 to $2.81 per share. We attribute these results to our record level cap -ex investments in our store base, improved efficiencies and operating discipline in the overall management of our stores, strong increases in our sales per customer and more comprehensive sales building programs during key holiday periods, particularly in the fourth quarter.
Hepfinger remarked that Weis has now achieved 13 quarters of strong operating results. Over the past three years, the publicly-traded retailer’s income and earnings per share increased more than 20 percent compared to 2006-2008, when the economy was in significantly better shape.
“Our organization generated these strong results in a market that continues to be impacted by the slow recovery and high unemployment. The poor economy has clearly affected our customers’ shopping habits,” Hepfinger declared. “According to a recent Market Tools (a market research firm) study, 63 percent of all American shoppers have changed their shopping habits over the past year while 67 percent are more likely to use coupons and 62 percent are more likely to buy private brand products. While this makes for a difficult market environment, it also offers opportunities to the companies who are willing to seize them.”
He added that over the past year, Weis continued to strengthen its ‘best in class’ private brand program which now numbers more than 6,300 products. Additionally, its gas rewards program continued to generate tremendous savings for Weis’ customers – more than $30 million over the past two years – while the merchant’s ‘price freeze’ program has helped customers save more than $35 million since 2009.
“While other companies slash their cap-ex investments and lay-off employees, we are making record investments in our store base and our organization. Over the past four years, we’ve upgraded two-thirds of our store base,” Hepfinger commented. “To match our bricks and mortar investments, we are also making record investments in our information technology infrastructure. Today, we are determined to give our people the information technology tools that allow us to efficiently manage our business and serve our customers.”
The 53 year old industry veteran also noted that Weis is also doing a better job at connecting with its customers. Over the past year, the chain has upgraded its website and generated a 30 percent increase in unique visits – over 2 million during the past twelve months. Its “Facebook Fan” page has nearly 50,000 fans – who are highly motivated customers with an average basket size 41 percent greater than our typical customer, according to the former Price Chopper executive.
“As part of our effort to connect with our customers, we have also worked to be a good neighbor in the communities we serve. In 2011, our cause marketing programs generated hundreds of thousands of dollars and in-kind donations for local food banks and pet shelters throughout are markets and in November we helped raise $100,000 for the ‘Wounded Warrior’ program, Hepfinger announced. “This year we will also shift some of our sports sponsorship dollars to local youth sports, including little leagues and 12 and under soccer leagues. We have taken a greater interest in sponsorships that directly benefit families in the communities we serve.
During his address to shareholders, Hepfinger also noted the company’s sustainability program has also helped in improving its overall image. Over the past three years, he asserted that Weis has reduced its carbon footprint by 12 percent, which has saved more than $1 million dollars. Additionally last month, two of itsPennsylvaniastores –Bellefonte andForksTownship- achieved the EPA’s GreenChill certification for reducing their refrigerant discharges by 50 percent – lessening their impact on global warming.
“Today, we are a better run company. Our stores and distribution system are more efficient and we see increased productivity throughout our company in ways that have helped us increase our sales and profits,” Hepfinger announced. “These efforts have resulted in some of the most successful grand openings in our company’s history. Over the past 12 months, we’ve had four record grand openings, including our most recent inBellefonte,PAwhere we generated over $4 million in sales during its first month – the highest one month total in our company’s history. We are pleased with these results but we will never settle. Our organization is committed to building on our success in way that delivers value to our key stakeholders – our shareholders, our associates and our customers. With their help and the wind at our backs, we look to the coming year with confidence and optimism.”
On the sales and earnings front, Weis once again posted strong numbers. First quarter net income increased 7.7 percent to $20.0 million compared to the same period in 2011 while its earnings per share increased $.05 to $.74 per share.
The company attributed its net income and operating income increases to improved store level efficiencies, increased productivity, disciplined promotions and marketing and a decrease in depreciation expenses resulting when it changed depreciation methods from accelerated to straight-line.
During the 13 week period ending March 31, 2012 the company’s sales increased 0.3 percent to $661.6 million while its comparable store sales increased 0.9 percent compared to the same period a year ago.
“Our company continues to generate strong earnings increases, as we have over the past three years,” said Hepfinger. “While our market share remains stable, our first quarter sales were clearly impacted by our customers’ continuing caution due to the slow pace of the economy’s recovery and to an unusually mild winter.”