Monday March 20, 11:21 pm Eastern Time
Heinz Seeks Boost From Boston Market
By GEOF BECKER
Associated Press Writer
PITTSBURGH (AP) -- Seeking to warm up earnings in its frozen
foods division, H.J. Heinz Co. (NYSE:HNZ - news) has pinned hopes on new meals sold under
the Boston Market Home Style label.
Heinz is introducing the frozen foods this week in Pittsburgh, its corporate home, where it
planned to give away 1,000 meals Tuesday in Market Square, a popular lunchtime gathering spot
that will be transformed into a ``Boston Market Square' by proclamation of City Council.
``Heinz frozen foods, over the next couple of years, we firmly believe, will show revenue and
profit growth well in excess of Heinz corporate goals,' said Neil Harrison, president and chief
executive of Heinz Frozen Food Co.
Heinz Chief Executive Officer Bill Johnson predicts Boston Market meals will add $200 million
to sales within two years.
In that time, Johnson expects frozen foods revenue to grow 4 to 5 percent and profits to grow 8 to
10 percent, Harrison said.
Heinz began selling Boston Market meals in September on the West Coast and now makes them
available in 30 percent of the country. Sales so far indicate first-year revenue will meet the
target $100 million, Harrison said Monday.
Analysts are watching the Boston Market project with great interest.
For a couple of years, investors have been disappointed by the lagging stock prices of prepared
foods companies such as Heinz, whose stock Monday was about 38 percent below its 12-month
high.
``If things work out to the extent that Bill Johnson envisions, (Boston Market) could be a terrific
boost to their earnings,' Bear Stearns food analyst Terry Bivens said. ``As new product launches
go, this is pretty significant.'
Bivens said he tasted and liked the meals, which include four meat and poultry varieties, costing
about $4 each, and five side-dishes.
Heinz expects the brand will bolster its struggling frozen foods division, helped by growth in the
Smart Ones diet frozen foods and a new resealable bag for Ore-Ida frozen potatoes being tested
in Phoenix and Denver. National introduction of the bag is scheduled for June, Harrison said.
The company's third-quarter overall earnings rose 5 percent from a year ago, but frozen food
sales dropped 6.7 percent to $227.1 million.
The company attributed the decline in part to the sale of product lines such as pocket sandwiches
and a small bakery business but also said it has sold fewer meals overall and had to cut prices to
compete with private labels.
Heinz licensed the Boston Market label last spring, agreeing to pay Golden, Colo.-based Boston
Chicken Inc., which filed for bankruptcy protection in 1998, a royalty based on sales. Heinz also
may create Boston Market soups and condiments and eventually market the brand overseas,
Harrison said.
The royalty agreement is part of the tentative sale of Boston Chicken and its 858 Boston Market
stores to McDonald's Corp. Boston Chicken creditors will vote on the sale in May.
``Clearly, McDonald's fully understands ... brand management. We expect they will continue to
develop the Boston Market brand, which will only be good for us,' Harrison said. |
