SCARBOROUGH, Maine -- Hannaford Bros. here said its net income rose 19.4% to $19.1 million, or 46 cents per share, in the third quarter ended Oct. 1.
Net income totaled $16 million, or 39 cents per share, in the year-ago quarter.
Sales, including the Wilson's Supermarkets chain Hannaford acquired in July, totaled $622.6 million, an increase of 17.4%. Excluding the sales at the 21-store Wilson's chain, which is based in Wilmington, N.C., the sales increase would have been 5.7% in the 13-week quarter, Hannaford said.
Hugh G. Farrington, president and chief executive officer, said the company was "extremely pleased" with the third-quarter results. He attributed the performance to an improving economy and a "smooth integration" of the Wilson's acquisition.
"Our same-store sales increased 1.8% in the third quarter and 1.2% for the nine-month period," he said. "Lower gross margins are being offset by lower selling, general and administrative expenses."
SGA expenses declined 66 basis points to 18.36% of sales in the quarter, according to Hannaford. Gross margins also fell in the quarter, 76 basis points to 24.35% of sales.
Farrington, in a statement, also said Hannaford expects to "accelerate" capital spending in 1995 to about $125 million, from an estimated $75 million in 1994. Hannaford, as reported, will expand its Wilson's chain into Richmond, Va., and Charlotte, N.C., next year.
Debra Levin, a securities analyst at Morgan Stanley, New York, attributed the lower gross-margin rate to the consolidation of Wilson's, which, she said, operates with a lower gross margin than Hannaford's core supermarkets.
"Furthermore, as Hannaford cuts its costs, it is reinvesting in lower prices to drive sales," Levin said in a recent industry report.
Mark Husson, a securities analyst at J.P. Morgan, New York, said Hannaford's earnings in the quarter of 46 cents per share were "very sound," and above Wall Street's consensus estimate of about 42 cents per share.
"The acquisition (of Wilson's) appears to have gone according to plan," he said. The company, however, has set "ambitious targets" for its expansion next year in the Southeast.