NORTHLAKE, Ill. -- Dominick's Finer Foods here said it plans to open 20 additional Fresh Stores over the next two years based on the success of the format over the past three years.
any plans for mid-October. Funds from the IPO will enable Dominick's to pay down debt and provide greater flexibility for more aggressive new-store growth, Mariano said.
Dominick's operates 97 stores in the Chicago area. It opened a single new store in 1994 but did not open any new units last year. Since being acquired by a group of investors led by Yucaipa Cos., Los Angeles, in March 1995, the company has opened three new stores this year, with four more due before the end of the fiscal year next month, Mariano said.
Of the chain's 17 Fresh units, 14 conversions that upgraded produce and prepared foods to the Fresh Stores format in 1994 and 1995 have had average sales increases of 30%, Mariano said, while the three new Fresh Stores that opened earlier this year "are performing very well." The chain plans to open four more Fresh Stores by the end of the fiscal year next month, Mariano said.
He said the company's investment in upgrading and expanding its store base resulted in higher sales and positive earnings for the third quarter and 40 weeks ended Aug. 3.
Sales rose 2.8% to $759.3 million for the 16-week quarter and 0.5% to $1.9 billion for the year to date, while same-store sales rose 2% for the quarter. The company declined to release comparable sales numbers for the 40 weeks.
Net earnings for the quarter were $1.7 million, compared with a loss of $5.7 million a year ago following the company's purchase. Dominick's did not release earnings for the 40-week period. Operating cash flow rose 16% for the quarter to $41.2 million, or 5.4% of sales, and 15.7% for the 40 weeks to $100.9 million, or 5.3% of sales.
Dominick's Supermarkets, the chain's parent company, has filed a registration statement with the Securities and Exchange Commission for the IPO.
Net proceeds from the offering will be used primarily to retire all outstanding 15% redeemable exchangeable cumulative preferred stock, the company said. It also plans to use the money to repay outstanding bank borrowings, plus available cash and borrowings anticipated under a new credit facility totaling $225 million.
Dominick's said it will apply for a listing of its common stock on the New York Stock Exchange under the symbol DFF.
Standard & Poor's CreditWire said last week it is revising its rating outlook on Dominick's to positive from stable based on improvements in the company's operating performance resulting from better buying, tighter expense controls and expectations that operating margins will continue to improve "as the firm assumes a more profit-oriented operating posture under its new owners, realizes the benefits of its Fresh Store remodelings and leverages off the combined purchasing power of all of the Yucaipa-controlled companies."
