Roundy’s Q4 Sales Up Amid Fiscal Year Loss
Roundy's ended its 2014 fiscal year with higher net sales and a second consecutive period of better same-store sales in Q4.
But the Midwestern grocery operator, which continues to grow its Mariano's banner in the Chicago area but is still struggling in its other markets, posted a net loss for the year approaching $253 million.
“While the current operating environment still presents challenges near-term, we remain confident in our ability to implement our strategic operational initiatives designed to optimize our long-term performance," said Robert Mariano, Roundy's chairman, president and CEO.
Net Sales Improving
Roundy's Q4 net sales from continuing operations increased 26 percent to nearly $1.08 billion, up from $853 million a year ago. Q4 net income was $7.5 million, or 16 cents per common share, up from $3.2 million for the year-ago period, while adjusted net income was $3.5 million.
For the entire 2014 fiscal year, Roundy's logged net sales of nearly $3.86 billion, up 15 percent from a year ago. Net loss from continuing operations was $252.9 million, or $5.30 per diluted common share, compared to net income from continuing operations of $25.8 million, or $0.57 diluted net earnings per common share, adjusted net loss was $2.1 million, or 4 cents a share.
“We are pleased with our improvement in net sales and EBITDA in the fourth quarter of 2014 from the prior year,” said Mariano, noting that the fourth quarter was the company's "second consecutive quarter of improved same-store sales. Overall, 2014 was a transition year for the company with our investments in Illinois growth and our transition out of the Twin Cities market. Each successive quarter was another building block in creating a solid foundation for the future.”
Same-store sales from continuing operations declined 2.3 percent in Q4, attributable to a 3.7 percent decrease in the number of customer transactions that was partially offset by a 1.4 percent increase in the average transaction size. The company said its same-store sales continue to be negatively impacted by competitive store openings in its Wisconsin markets. Gross profit in Q4 increased 21 percent to $275.6 million, from $227.8 million in the same period last year.
The overall FY sales increase "primarily reflects the benefit of new and acquired stores in Illinois and the impact of an additional week in 2014, partially offset by a decrease in same-store sales," Roundy's reported. Further, same-store sales for the year declined 3 percent, which the company blamed on a 4.8 percent decrease in the number of customer transactions, partially offset by a 2 percent increase in average transaction size.
During Q4, Roundy's sold its Stevens Point, Wis., distribution facility that formerly suppied its Copp's store for $15 million, resulting in a gain of $10 million ($6.5 million after-tax). The action followed its Q2 pullout from the Twin Cities market with the sale of 18 Rainbow stores in the Minneapolis/St. Paul area to a group of local grocery retailers including Supervalu Inc., followed by the closure of nine other Rainbow stores during Q3.
Fiscal 2015 Guidance
For FY 2015, Roundy's anticipates net sales of $980-990 million in Q1 and $4-4.08 billion for the year. The company projects same-store sales to dip .25-1.25 percent in Q1 and .75-2.75 percent for the year.
Roundy's expects $10-15 million of capital expenditures during Q1, including one store opening, and $68-73 million for the year, including five new stores.
The company projects a loss of up to a nickel a share in Q1 and 7 to 18 cents a share for all of FY 2015.
Milwaukee-based Roundy's operates 149 retail grocery stores and 99 pharmacies under the Pick ’n Save, Copps, Metro Market and Mariano’s retail banners in Wisconsin and Illinois.