GREAT FALLS, Mont. -- Buttrey Food & Drugs here is taking steps to counter the erosion of sales resulting from new shopping options in its markets. Joseph B. Fernandez, president and chief executive officer, told the company's annual meeting here the steps fall into three areas:
Repositioning the company toward a leadership role in perishables merchandising.
Redefining objectives in general merchandise.
Improving the competitive-pricing position.
Fernandez said the moves are necessary because sales fell 7.1% last year, same-store sales declined 9.6%, "and we believe the company will continue to face a difficult sales environment in 1994."
Meanwhile, Buttrey recently reported net income rose to $25,000 from $7,000, while sales fell 8.2% to $98.2 million in the first quarter ended April 30. Same-store sales dropped 7% -- due to the impact of store openings and remodelings by competitors, price reductions in certain food categories and limited inflation, the company said. Cash flow fell to $4.3 million, or 4.4% of sales, compared with $5.3 million, or 5% of sales a year ago. The company attributed the decline to a reduction in gross profit as a result of the lower sales base. Fernandez told the annual meeting the 44-store chain wants to increase sales, reduce costs and improve the productivity of assets. To increase sales, Buttrey will attempt to maintain its existing customer base while increasing the value of the average transaction, he said.
It will use in-store merchandising programs to inform customers of special sales, Fernandez explained.
Buttrey has also improved its perishables merchandising with new, upgraded quality standards and new merchandising techniques, he added. "We believe leadership in perishables is a niche we can exploit that will help differentiate us from our food and nonfood competitors," he said.
In addition, Buttrey is modifying pricing strategies in all departments to offer more competitive everyday pricing and passing cost savings realized from better buying practices or through operating efficiencies back to customers in the form of lower prices, he said.
To cut costs, Buttrey has eliminated 30 staff positions by reassigning management employees to store-level posts that have opened up, and it has frozen 1994 management salaries at '93 levels.