Grand Union Outlines 53 Capital Projects for Fiscal Year; Plan Includes New Stores and Significant Improvements in Existing Stores
WAYNE, N.J.--(BUSINESS WIRE)--April 13, 1999--The Grand Union
Company (NASDAQ:GUCO) today announced an aggressive $115 million
capital development program for fiscal year 2000, which began on April
4, 1999.
Included are 53 separate projects, including 10 new or
replacement stores, three expanded stores, 14 major remodels, 18
remodels to enhance existing locations and eight store conversions.
The 10 new stores in this plan, including replacement stores, will
add approximately 410,000 square feet, or 7 percent, to the Company's
existing store base. Two new formats will be added to the Company's
range of store types, including four upscale Fresh Market formats in
Connecticut and on Long Island, and two super discount stores in New
York State. These stores are in addition to the Company's Hot Dot
Foods limited assortment format introduced in the last fiscal year.
"Grand Union is moving aggressively to improve its existing store
base and add incremental square footage," commented J. Wayne Harris,
Chairman of the Board and Chief Executive Officer. "Both strategies
are designed to boost our total sales and EBITDA through the use of
attractive shopping environments, targeted product selection and
competitive pricing."
"Our primary new store prototype will be a 55,000 to 60,000
square foot supermarket, which will offer the customer a high-end,
superior quality shopping experience at competitive prices," Harris
said. "Also introduced by Grand Union this year will be a high-volume,
super discount format. Together with expansion and replacement
projects, our capital plan will help us grow into a more dynamic and
comprehensive marketplace competitor."
Harris said that fiscal 2000 marks the first full year in which
major capital spending has been possible since the Company's current
management team joined Grand Union over the last two years. "Even
though we were capital constrained over the last year and a half, we
have still been able to sustain sales, maintain our customer base and
dramatically improve operating results," Harris said. "Now, we are
putting a strategy in place to grow Grand Union into a more vigorous
retail leader. At the same time, we are also updating and adding
technology to enhance cost-competitive operations and ensure a modern
shopping environment. We expect to begin to see accretive benefits
from our plan in the latter part of fiscal 2000 as well as throughout
fiscal 2001 and beyond."
Harris explained that it would take the first three quarters of
fiscal 2000 before a significant number of the projects could be
completed, and that there would be some disruption during the actual
remodeling process. "Still, we have managed to improve our operating
results through one of the toughest periods in Grand Union's history,
and we are confident that this strategy will pay off for our
customers, associates and shareholders."
"Once our existing store base has been upgraded," Harris said,
"Grand Union will see a substantial increase in store openings in the
years to come."
Specifically, Grand Union plans to include the following major
projects in its capital plan in fiscal 2000, which began April 4,
1999:
-- Ground-up construction of three new supermarkets in New
Jersey. One, in Carlstadt, will be the first to be built
totally according to the Company's new prototype. It should
open before the end of calendar 1999.
-- Ground-up construction of two super discount stores in New
York State. These stores will introduce this food retailing
format to Grand Union.
-- Construction of replacement supermarkets in New Jersey and
Vermont. A new replacement store in Point Pleasant, New
Jersey, which opened on March 13, is the Company's first new
prototype store. The interior design and exciting decor
package in the new prototype are designed to appeal to
contemporary consumer tastes.
-- Fresh Market format stores in Connecticut and on Long
Island.
-- Expansions of existing locations in Vermont and New Jersey.
"The newly-opened Point Pleasant store demonstrates the potential
of our new format and strategy," Harris said. "Since its opening,
sales have exceeded our most ambitious expectations. We believe the
format will be very appealing to consumers, help build our top line,
enhance our competitive position in the areas we serve, and
significantly contribute to our efforts to reposition the Company."
Harris said Grand Union will announce its fiscal 1999 fourth
quarter and year-end results on May 19, 1999. "The marketplace
continues to be fiercely competitive," he said. "Nonetheless, we
expect to report positive comparable store sales for the fourth
quarter, and we expect to achieve a very strong EBITDA performance
compared to the prior year. These improved results will include
continued progress in our expense control efforts."
Grand Union currently operates 220 stores under the Grand Union
and Hot Dot Foods trade names in the states of Connecticut, New
Hampshire, New Jersey, New York, Pennsylvania and Vermont. Its common
stock is traded on the Nasdaq National Market under the ticker symbol
GUCO. |
