The new Grand Union
Grand Union Announces Improved First Quarter Results
WAYNE, N.J.--(BUSINESS WIRE)--Aug. 19, 1998--
- EBITDA Increases Threefold Over Last Year -
The Grand Union Company (GUCOV-OTC) today announced significantly improved first quarter results. The Company said that EBITDA (earnings before interest, taxes, depreciation, amortization, unusual and extraordinary items) for its 16-week first quarter ended July 18, 1998, totaled $31.1 million, more than a threefold increase over the $9.6 million reported for the same period last year. The increase resulted primarily from continued improvement in expense control in all facets of the business as well as improved gross profit.
With two fewer stores this year, sales during the first quarter totaled $691.9 million, a decrease of 2.3% from sales of $708.0 million during the same period of the prior year. Comparable store sales for the first quarter decreased 1.4%, primarily as a result of the adverse effect of unusual weather conditions in the Company's Northern Division. The Company's Southern and Eastern Divisions, with stores operating in metropolitan New York, Long Island, New Jersey and Connecticut, had positive comparable store sales.
J. Wayne Harris, Chairman of the Board and Chief Executive Officer, said, "This encouraging first quarter performance was achieved despite the fact that our Company was undergoing a major capital restructuring during the entire period. With the restructuring now complete, we are a new company with a bright future and a clear strategic vision. The Company is financially stronger than at any time in the past 10 years, and our team is committed to making Grand Union one of the premier food retailers in the Northeast.
"As we move forward, we have the benefit of an experienced and innovative management team and excellent store locations. We will immediately embark on a major capital development program, which will include the construction of new stores and renovations and enlargements of existing stores. The strategic plan includes customizing store offerings to better serve the needs of local customers and further enhance our performance.
"At the same time, we have developed a pattern of aggressive merchandising in every area in which we operate. We are already experiencing the positive impact of those programs with an improving overall sales trend in the latter part of the first quarter that is continuing into the second quarter.
"We are excited about the long-term prospects for Grand Union. The management team is fully focused on making Grand Union one of the most successful food retailers, providing excellent value and service to our customers, new opportunities for associates and increased value for shareholders."
Grand Union's capital restructuring eliminated nearly $600 million in high-cost debt from its balance sheet, reducing annual interest payments by approximately $72 million. The Company now has approximately $381 million in long-term debt, including capitalized leases and its new credit facility.
The $32.5 million of interest expense for the first quarter is comprised primarily of $16.9 million on the Old Senior Notes, $8.1 million on bank financing and $6.2 million of capital lease interest payments. Emergence from bankruptcy eliminated the $16.9 million of interest on the Old Senior Notes and the entire $2.3 million of accrued preferred stock dividends.
For the first quarter, the Company reported net losses of $54.4 million before unusual and extraordinary items, compared to $79.2 million during the same period of the prior year. After an unusual charge of $4.5 million for expenses related to its bankruptcy filing, an extraordinary charge of $1.7 million related to prepaid expenses on refinanced debt and the previously mentioned accrual of $2.3 million for preferred stock dividends, the Company reported net losses for the first quarter of $62.9 million compared to a net loss of $81.3 million in the prior year. There were no comparable unusual or extraordinary charges during the first quarter last year.
Grand Union currently operates 222 retail food stores in Connecticut, New Hampshire, New Jersey, New York, Pennsylvania and Vermont. Grand Union's common stock, under the symbol GUCOV, will trade on the OTC Market on a "when and as if issued" basis. The Company has a pending application for listing of its common stock on the NASDAQ National Market. |
