Weis Markets announced at its annual meeting held at its corporate headquarters in Sunbury, PA on April 28 that it would increase its 2011 capital expenditure budget by seven percent to $110 million.
Jonathan Weis, vice chairman, also briefed shareholders on the Weis’ current plans and its 2010 results. The current budget includes 14 major remodels, two additions and three new/replacement stores. The retailer is scheduled to open its new replacement store in West Lawn, PA on June 6 and a net new unit in Forks, PA on June 26. Another new replacement store in Bellefonte, PA is slated to open later this year.
Next year, Weis will celebrate its 100th birthday.
“We’ve significantly increased the pace and tempo of our growth,” said Weis. “Over the past two years, we’ve averaged 15 major projects – triple what we were doing a couple of years ago – and our cap ex budget has increased by nearly 35 percent during this period. We continue to reinvest in our stores, information technology systems and human capital at an unprecedented rate.”
Weis added: “In 2010, our net income and operating income increased more than nine percent and our comparable store sales increased one percent. This marks our second consecutive year of strong results. We attribute our results to increased productivity and improved cost controls at store level, supply chain improvements, efficient procurement and a disciplined Go-To-Market strategy. Our in-stock conditions, perishable quality and housekeeping have also improved significantly. We will build on our progress in the coming year. At a time when other companies are cutting back or closing stores, we continue to reinvest in our stores, information technology systems and our human capital at an unprecedented rate.”
The vice chairman also took time to praise his father, chairman Robert F. Weis, who last month celebrated his 65th anniversary with the company.
“When he returned to Weis Markets after his World War II service, we were a small regional company. In the decades that followed, he helped build one of the most successful – and ethical – supermarket companies in the United States – a company that has employed tens of thousands of people in first-class working conditions and one that continues to have a sizeable economic impact on our home state of Pennsylvania,” Jonathan Weis noted. “Under his guidance, our company is approaching $3 billion in annual sales with no debt. Let me repeat that – no debt. We are not the biggest supermarket company out there but we are one of the most solid. Our opportunity is to grow profitably and our outlook, like my father’s is long-term. My father has lived a life of great accomplishment and achievement yet his eyes are always on the future.
He is also a person who embraces and seeks out what’s new and better. Change has never frightened him and he has never been reluctant to embrace it. When you do this and keep your core values of integrity and devotion to customer service I guess the years tend to roll by.
We are enormously proud of my father.”
Also addressing the shareholders was David J. Hepfinger, president and CEO of Weis, who reviewed results for 2010 and its increased first quarter earnings.
“This marks our ninth consecutive quarter of strong operating results,” said Hepfinger.
“Over the past two years, our earnings have increased 28 percent and our rate of sales is up 18 percent.” Hepfinger added that Weis would continue to increase its technology investments, which totaled $25 million in recent years.
“While we will continue to make major investments in our store base, our growth will be based on more than just bricks and mortar,” said Hepfinger, who joined Weis from Price Chopper in 2008 and became chief executive in 2010. “Effective Information technology systems are essential to our growth and success. We are determined to give our associates the tools and analytics they need to better serve the needs of our business and our customers. Our IT investment totaled $25 million in recent years. Later this summer, we will begin the two-year roll out of our biggest IT program ever: RetailX which will give us computer assisted ordering and eventually computer generated ordering. This program will help us anticipate the needs of our business and keep us in stock. It will also improve our inventory control and help us manage our shrink. It is an enormous project that is essential to our future. Ultimately, we expect this system to generate $18 million a year in increased profits.”
Hepfinger also praised the hard work of the Weis’ associates noting that “We are extremely proud of our organization. When the chips were down, our associates were at their best – it’s a tremendous achievement for our entire team. Our success is due to improved execution at every level of our company. Today our stores are operating more efficiently in a way that benefits our business and our customers. Our distribution system and manufacturing systems are also working more effectively to meet the 24-7 needs of our stores. Our marketing and merchandising teams—along with our other sales support associates have also risen to the challenge. These upgrades and improvements have helped us become a sales drive organization – a profitable sales driven organization.”
Noting the importance of being a regional chain, Hepfinger provided examples of what “local relevance” really means.
“We’ve always purchased locally but today we do it more strategically. In 2010, we purchased a record 24 million pounds of local produce – and our Pennsylvania Angus Beef program has tripled its sales since 2008. We’ve also expanded this concept to offer products that are locally relevant to customers. Consider the milk category. In recent years, we have supplemented our Weis Quality Milk with local brands including Crowley’s in Binghamton, Lehigh Valley in Central PA and Cloverland in Maryland. The results have been dramatic: more than $20 million in increased sales. That’s just one example of our commitment to working not just harder – but smarter,” he stated.
In his closing remarks to the shareholders, Hepfinger said, “As a company and as an organization we are committed to profitable growth. While we are proud of our heritage, we remain firmly focused on the future. Over the past three years, we have been on a journey of growth and improvement. During this time, we have challenged our associates like never before and I am proud to report they have responded. With their strong support and the wind at our backs, we will build on legacy as we approach our 100th.”