SCARBOROUGH, Maine -- Hannaford Bros. here has reaffirmed its commitment to its Northeastern core as it proceeds with an ambitious Southeastern growth program.
This year, Hannaford is slated to open three new stores in the Northeast along with 10 new stores in the Southeast and an expandable 450,000-square-foot distribution center in Butner, N.C., according to its 1995 annual report. The company entered the Southeast in 1994 when it acquired 20 Wilson's Supermarkets, based in Wilmington, N.C.
The company is approaching 1996 "with both optimism and caution," the annual report said. "The caution comes from our heavy startup investment in the Southeast and competitive activities intended to counter our entry. Our optimism is based on having excellent stores and people and very positive responses from our customers."
Though Hannaford's net earnings increased 12.7% and sales rose 12.1% in 1995, earnings flattened in the second half as the company absorbed the costs of opening seven new stores and acquiring six others in the Southeast, according to the report. "We expect the first half of 1996 to be relatively flat as well," it said, "[because] our geographic expansion is front-loaded with costs, and we expect the profitability to improve as we reach critical mass for operating efficiencies and as we grow our customer base in the new stores."
Plans for this year, the report said, include the following:
· Hannaford will boost its capital expenditures in 1996 to more than $200 million, an increase of more than 23% over the $162.3 million it spent in 1995.
· The company will continue to use the Hannaford logo on new stores in the Southeast and Northeast. It has not decided if or when to give up the well-accepted Shop 'n Save name in the Northeast. · It expects to complete redesigning and renaming its private-label lines with the Hannaford name by mid-1996. While growth into the Southeast is Hannaford's newest strategic thrust, the report stressed the 134-chain's commitment to both regions in which it operates. "We would like to emphasize that, although we are conducting a major expansion effort in the Southeast, we have not nor will not neglect our core Northeast markets. It is critical that we continue to grow our business [there]," it said, noting that "opportunities [in the Northeast] are somewhat limited. "We are looking at the Southeast expansion as a significant step toward achieving our long-term goals for company growth and providing new opportunities and challenges for all Hannaford associates." Hannaford entered five new Southeastern marketing areas in 1995 -- "a move we felt was necessary due to the interest in that part of the country by other supermarket operators," the report said.
The new distribution center in Butner, scheduled to open at the end of this year, will cost about $40 million. Hannaford currently has 34 Southeastern stores that are supplied by its own facilities in Schodack, N.Y., and Winthrop, Maine, and by divisions of Fleming Cos., Oklahoma City, in the Southeast. "We will most likely continue to buy some products from our current wholesaler" once the Butner facility opens, the report said.
Hannaford plans to spend $200 million on capital investments this year for construction of the new distribution center plus 13 new stores, six replacements and two store expansions, which will boost total and selling square footage by nearly 14%, according to the report. In 1995, it spent $162.3 million in capital investments to open 10 new units, relocate three and acquire six others, which increased total square footage 16.6% to nearly 5.9 million square feet and increased selling area 17.5% to 4.2 million square feet. The new Northeastern locations will include a 45,000-square-foot store in Williston, Vt.; a 45,000-square-foot store in Brattleboro, Vt., Hannaford's first unit in that area, and a 64,000-square-foot store in Niskayuna, N.Y. The company also plans to relocate stores in Waterville, Maine, and Chelmsford, Mass., to larger facilities. In the Southeast, Hannaford is considering six new stores in North Carolina (three in Charlotte, two in Cary and one in Raleigh) and four in Virginia (in Richmond, Norfolk, Danville and Chester). It also plans to bring two Wilson's stores in Wilmington and Shallotte, N.C., under the Hannaford banner and to convert two of the six units it acquired in September from Farm Fresh -- called The Grocery Stores -- to the Hannaford name this year. The other four Grocery Store locations will be expanded or remodeled and will be renamed Hannaford before the end of 1996, the company reported. In the Northeast, Hannaford uses the Shop 'n Save name on most of its stores, but last year it put the Hannaford banner on seven stores in the Southeast and nine in the Northeast, marking the first time it has used its corporate name on any stores. All seven Southeast stores were newly built; in the Northeast, the company converted the name on its Sun Foods super-warehouse stores in New York and New Hampshire and its five Martin's Shop 'n Saves in Vermont.