LONG BEACH, Calif. -- Certified Grocers of California, the retailer-owned cooperative here, is headed "for a new era of prosperity and sustained growth," Alfred A. Plamann, president and chief executive officer, told members and vendors here.
ird quarter, though not yet complete, look equally promising," he said.
In fact, he said, 1999 could become "one of the most historically significant years in our company's history" because of a series of initiatives within the company, including the following:
The pending merger with United Grocers, Portland, Ore. "By eliminating redundant facilities, combining similar departments and reducing overall administrative costs, we believe the annual savings to the new company (to be called Unified Western Grocers) would be in excess of $20 million," Plamann said.
"We also believe that Unified Western Grocers will benefit from increased buying power, from synergies that result from combining the best practices of both organizations and from an overall expansion of marketing territories and service areas."
The pending purchase of 31 divested units of Albertson's and Lucky Stores from Albertson's, Boise, Idaho, which would immediately be resold to member retailers.
The acquisition in December of the assets of Sav Max Foods, Modesto, Calif., a seven-store price-impact chain in northern California.
"We are operating Sav Max as an asset of Certified Grocers held for disposition, and store sales have increased since we assumed control of the operation," Plamann said. "We believe the Sav Max transaction supports our long-term strategy of developing a seamless interface between wholesale and retail operations, and we look forward to the success we know it will achieve in the very near future."
The rollout of "Certified Pallet," a warehouse program to eliminate shipping errors and mispicks on every customer order, which Certified has been testing since the spring and which is scheduled to go companywide later this summer.
Plamann said the program will be fully operational at Certified's mechanized warehouse in Los Angeles "in a matter of weeks" and is expected to generate annual savings of approximately $1.8 million. He also said it will eventually be rolled out to all of Certified's distribution facilities.
The acquisition in early June of Gourmet Specialties, Hayward, Calif., a $53-million full service distributor.
"By combining the strengths of Gourmet Specialties, which sells gourmet and ethnic specialty food products in northern California, with the strengths of our own Grocers Specialty Co., which distributes Hispanic foods, candy, tobacco and vitamins, minerals and supplements in southern California, Certified emerges with a full-line specialty company with a strong base of customers in all parts of the state," Plamann said.
"Add to that the combined purchasing power of both organizations, as well as improved system efficiencies and other synergies, and you've got a specialty company that is poised for tremendous growth and success in the weeks and months ahead."
Plamann told the Expo audience that 1998 was a transitional year for Certified, with sales down following the sale of two of its largest independent members -- Hughes Family Markets, Irvine, Calif., to Fred Meyer, Inc., Portland, Ore., and Nob Hill Foods, Gilroy, Calif., to Raley's Supermarkets, Sacramento, Calif.
In addition, he said 1998 earnings were negatively impacted by extraordinary one-time charges related to Certified's refinancing and legal matters. However, that refinancing is now saving the company more than $2 million per year in interest payments, he said, "and the sale of a portion of our property enabled us to make significant investments in our physical infrastructure."
During 1998 the book value of the company increased to $183 per share, Plamann said -- more than $20 per share higher than it was in 1994. "And although our pre-patronage dividend was down slightly from the year before, pre-patronage income was $17.1 million, more than double what it was in 1994," he noted.