COLTON, Calif. -- Stater Bros. Holdings here said last week it has experienced "a tremendous increase" in customer counts during the Southern California strike-lockout, with sales climbing 50% during the first quarter ended Dec. 28, 2003.
However, the chain is getting ready to lose some of that business when the labor dispute is finally settled, Jack Brown, chairman, president and chief executive officer, told bondholders in a conference call last week. "We're preparing our stores for a downturn in volume," Brown said.
Sales for the 13-week quarter rose 50.6% to $1.0 billion, and comparable-store sales jumped 49.3%; net income rose more than 1,000% to $34.6 million.
Brown said comps were running in the range of plus-5% at the time the strike-lockout began in October, "and we look at that as a base to build from." He declined to pinpoint how much strike-related volume the chain expects to hold onto. However, when prompted by a bondholder, he said he'd be happy to keep 5% to 10%.
Asked how Stater accommodated the extra volume, Brown explained, "When the labor dispute began, there was a brief lull because people had already filled their pantries in anticipation of a strike. But by the end of that first week, people started flooding into the stores, and because we had formulated a plan 60 days earlier, we immediately moved most part-time people to full time, activated people in our checker training school more quickly than normal, and looked for additional temporary employees, though we brought in only a few.
"In addition, we worked to improve our inventory turns, leased additional transportation equipment and warehouse space, and met with key suppliers to turn the spigot on as quickly as possible."
Once the dispute is settled, Brown said he anticipates a period of increased competitive activity in Southern California, and he said Stater will do what it has to do in that situation. "The competitive situation requires the chains to compete at whatever level they need to, with very aggressive advertising and promotions to regain lost customers. We anticipate that, and we will meet it successfully."
Brown said Stater is close to signing a deal for a new 1.8 million-square-foot distribution center, which he estimated will require 180 acres and will cost more than $100 million. The primary requirement in seeking a new site was that it be no more than 30 minutes away from the chain's existing facilities "so our people don't have to move. Taking care of the Stater family of employees was a top priority," said Brown.
