Weis’ Outlook Remains Bullish Despite Still Challenging Economy, Overstored Conditions

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Weis Markets, the Sunbury, PA-based regional supermarket chain which has enjoyed a strong three year growth run, told more than 400 direct sales reps, food brokers and distributors that, despite challenges created by the economy, overstoring in its key market areas and changing shoppers’ patterns, it continues to be optimistic about its future growth.

Speaking at the company’s third annual strategic alignment summit which was held this year at the Marriott Hotel near BWI Airport, four Weis executives addressed a packed house. Led by chief executive Dave Hepfinger, the company’s speakers summarized progress made during the past 12 months while outlining new initiatives for 2013.

Hepfinger broke his speech into three segments: How Weis’ Customers Live and Shop; How the Company Advertises and Markets Itself to Its Customers; and How It Manages and Grows its Business.

The 54 year old former Price Chopper executive noted that, despite slightly improving unemployment numbers (7.8 percent) in September, the number of Americans still out of work or underemployed remains at nearly 21 million. And in Weis’ trading area (PA, MD, WV, NJ and Broome County, NY) the median unemployment rate remained higher than the national average. Hepfinger also noted that the number of Weis shoppers who utilize SNAP (Supplemental Nutrition Assistance Program) has increased from 2.7 percent of total sales in 2008 to 6.7 percent of total sales currently.

While noting the decline of median household income over the past 20 years, Hepfinger compared three popular consumer items along with the price of unleaded gasoline in 1996 with the cost of those items today. The difference increased 115 percent. He then discussed what he called the “Market Dynamic” that has occurred over the past four years. Included in that dynamic were stressed customers, an over-stored market, moderate to stagnant population growth, reduced overall consumption and low consumer confidence. Despite the hurdles, Hepfinger believed that the company would succeed if it could execute in five critical areas. Those factors were: establish a sales driven culture; continuously upgrade the organization’s talent pool; become more relevant to consumers; create meaningful differentiation and significantly improve decision support and measurement.

As proof that the plan is succeeding, the veteran grocery industry executive referred to Weis’ recent financial results. Not only have the past three years been highly successful when measuring earnings, overall revenue and same store sales increases, but, in fiscal 2012 thus far, Weis’ net income has increased 10 percent to $43.2 million. Its operating income is up 9.7 percent, overall sales have gained 0.2 percent to $1.3 billion and comp store sales have increase 0.7 percent. (Weis’ fiscal year ends December 31, 2012).

Moreover, the company has committed a record $125 million to capital investment this year, which, in addition to upgrading IT and other infrastructure improvements, includes two new stores, one expansion, 18 major remodels, seven minor remodels and three new gas stations.

Since 2008, Weis has acquired 17 stores and in the 12 month period from June 2012 through May 2013 will have opened six stores formerly occupied by other retailers (Conshohocken, PA; Doylestown, PA and Norristown, PA – from Genuardi’s/Safeway; and Woodlawn, MD; Towson, MD and Hillsborough, NJ – from A&P).