Weis Markets said it will invest $135 million in its 2013 capital expenditure program, an eight percent increase compared to the year prior. Company president and CEO David Hepfinger and vice chairman Jonathan Weis briefed shareholders on the plans and the company’s results at its annual shareholder meeting, held April 24 at Weis Markets’ store support center in Sunbury, PA.
“To position our company for continued growth, we have made record investments in our store base,” said Weis. “Look for more of the same in 2013 when we increase our cap ex investment to $135 million – an eight percent increase compared to 2012 – and a 33 percent increase compared to 2011.”
In 2013, the company is planning 37 major projects including four new stores, 15 major remodels and 17 remodels.
“By the end of 2013, we will have invested nearly half a billion dollars in our growth and will have completed more than 100 projects. Our cap ex program also includes record level investments in our information technology infrastructure,” added Hepfinger. “Improving our decision support and measurement capabilities are essential to our growth and future profitability.”
According to Hepfinger, supply chain and improving service are also key areas of focus, “Our organization has worked diligently to improve efficiencies throughout our supply chain — from distribution to the customer’s cart. We are also holding ourselves accountable to our customers in all that we do, which has resulted in better in-stock conditions, improved freshness and product rotation and better customer service.”
On May 6, the retailer reported its first quarter sales increased 3.2 percent to $682.7 million compared to the same period in 2012 while its comparable store sales increased 0.8 percent.
For the 13 week period ending March 30, 2013, the company’s net income increased 0.5 percent to $20.1 million compared to the same period in 2012 while its diluted earnings per share increased to $.75 per share compared to $0.74 per share for the same period a year ago.
“We continue to make forward progress in a market impacted by a poor economy that is generating minimal job growth. These have been ongoing trends in most of the markets we serve,” said Hepfinger. “Our customers were also impacted in the first quarter by a tax increase and post-holiday debt. This soft sales environment spurred increased competitive activity in most of our key markets. We were able to offset these trends through disciplined marketing and promotional programs and improved productivity and operational efficiencies at store and distributional levels.”
Hepfinger also noted that the average household income has declined 7.3 percent since 2007. As a result, unemployment remains stubbornly high. Our customers’ changed economic circumstances have clearly impacted how they shop our stores.
“Today, our customers are more cautious in their spending and intensely focused on value. In 2008, food stamps, or SNAP benefits as they are called today, generated less than percent+ of our sales. Today, the SNAP segment of our business is roughly 6 percent — double what it was in 2008,” he stated.
In addressing Weis’ loyalty marketing program, the former Price Chopper executive claimed success with its “Gold Card.” Last year, the marketing effort helped generate more than $12 million in increased sales and has doubled in size to nearly 30,000 members.
“We are pleased with our results but will not rest on our laurels. As a company and as an organization, we will never settle. Our success and our future are based on the commitment of our associates. In recent years, we have asked more of our people – in return we have done a better job in meeting their needs in terms of compensation and benefits. Our commitment and promise to our associates is simple and basic: if our company does well, so will our people. This commitment will help us profitably drive sales and market share growth in a way that delivers enduring value to our shareholders,” Hepfinger said.
Before Hepfinger addressed Weis’ shareholders, vice chairman Jonathan Weis added several other key points. The youthful vice-chairman noted that “poor economy continues to have an enormous impact on our industry. Our markets were impacted by slow economic growth, high unemployment and declining household income, As a result of these continuing trends, our customers remained cautious in their spending in 2012. We understand these new realties, but are not discouraged by them.”
He recapped 2012 by illustrating Weis’ store improvement achievements: 31 total projects completed including five new stores and 18 major remodels.
“Our ultimate goal is disciplined growth – the kind that will allow us to profitably increase our market share and position us for strategic acquisition opportunities as some of our competitors shed stores and others exit our markets,” Weis told shareholders. “Today, we remain a company with a durable market presence that is determined to grow. We are enormously proud of the men and women of Weis Markets who have been instrumental in our success. Quite simply, their success is our success – we are truly grateful for their support and look forward to another strong year in 2013.”
