PORTLAND, Ore. - Fred Meyer is pushing ahead with an aggressive square-footage expansion program that includes a new prototype, Robert G. Miller, chairman and chief executive officer, told the annual meeting here recently.
million spent last year and an 83% increase over the $145 million allocation in 1992, Miller said.
Miller said the company plans to open five or six new stores a year and remodel seven to nine in each of the next five years. That represents an annual square-footage increase of 6% or more, "which, combined with comparable sales growth, will give us an average annual sales growth of 10% a year starting this year," he said.
"We currently have control or are working on approximately 40 top-quality sites in our existing markets, which gives us flexibility as to which stores we open first and gives us confidence that we can meet our growth projections," he said.
Miller also said the company has developed a smaller prototype of 125,000 square feet - in contrast with its standard 145,000- to 165,000-square-foot stores - "that will allow us access into many smaller markets we previously passed up." The first smaller prototype is scheduled to open next year in Tillamook, Ore.
The company is in the process of expanding its revolving credit line to include 18 banks and $400 million, "primarily to support our increase in new stores and remodels," Miller told shareholders.
Miller said he believes the rate of competitive openings, which included more than 500 new stores from 1988 to 1993, will slow down, giving Fred Meyer an edge as it increases its store base.
Store expansion will be focused on established markets, Miller said, "which allows us to leverage existing distribution, supervisory and sales promotion costs."
The company expects to extend its presence particularly in Salt Lake City, where two new stores will open in 1995, and in Seattle, Miller said.
"During the past two years, our new-store growth slowed as we focused our resources on improving the profitability of our business," Miller told sharehollders.
Fred Meyer opened three new stores in 1991, opened two stores and completed three remodels in 1992 and opened five stores and completed seven major remodels last year, he said.
In the 1994 fiscal year, which ends in late January 1995, the company expects to open five new stores and do seven major remodels, he noted. It has already opened stores in Brookings, Ore., Soldatna, Alaska, and Vancouver, Wash., and has scheduled store openings in Boise, Idaho, during the second quarter and Bonney Lake, Wash., in the third.
In 1995 it plans six new stores and seven more remodels, including the smaller prototype in Tillamook, Ore.
Fred Meyer plans to add food at five of its 12 Utah stores this year, Miller said. Of its 127 stores, 80 include food.
Food represented 37.5% of the company's net sales of $2.98 billion last year, he noted.
According to Miller, the company's remodels have generated first-year sales increases averaging 14% in stores with no food additions, "and the average increases have been even higher at stores where new food departments were added to nonfood stores," he said.