WAYNE, N.J. -- At Grand Union Co. here, investment in a customer-focused, long-term strategic plan squeezed net earnings, but helped lift sales for the first quarter.
uarter. The company reported a $43.8 million net loss in the quarter vs. an $816,000 gain a year before. Earnings before interest, taxes, depreciation and amortization fell to $41.4 million (5.7% of sales) from $44.3 million (6.1% of sales).
Earlier this summer, Grand Union agreed to turn over majority control of the company, selling $100 million of its preferred convertible stock to a Burbank, Calif.-based investment firm. The proceeds of the sale will help fuel the chain's capital-improvement project, the core element of its long-term plan.
"We were encouraged by our second consecutive quarter of positive same-store sales and by our EBITDA results in view of the additional investments we made during the first quarter," according to Joseph J. McCaig, Grand Union president and chief executive officer. The chain has trimmed costs in such areas as distribution, overhead and hourly wages, he noted, adding that he expects continued EBITDA improvement. Grand Union said its first-quarter capital spending totaled $17 million, and it expects to spend $65 million to $70 million in the fiscal year. It opened one new store and one replacement unit in the quarter.