ROSWELL, Ga. -- As it rolls toward profitability, Harry's Farmers Market here is turning its strategy toward growth, Harry A. Blazer, chairman, president and chief executive officer, told shareholders at the company's annual meeting.
f of June have sustained that trend, he noted. July and August sales are expected to be bolstered by food and food-service contracts with the Summer Olympics and the Atlanta Paralympic Games.
Results for the first quarter ended May 1 showed improvement, Harry's reported. The chain had a net loss of $319,000 (5 cents a share) vs. an $836,000 net loss (14 cents a share) a year ago. Same-store sales were off 3.9% vs. an 8.1% decline in the prior-year quarter. Total sales, though, fell 4% to $33.5 million from $34.9 million a year before.
Also in the quarter, gross profit rose to $8.95 million from $8.65 million a year before, and gross margin increased to 26.7% from 24.8%, Harry's reported. The chain also recorded income from operations of $31,000 vs. a $337,000 loss a year before.
Harry's owns and operates three 100,000-square-foot megastores plus two Harry's In A Hurry stores, a 10,000-square-foot format specializing in fresh, prepared and specialty foods.
"Our positive sales trend and recent return to profitability, coupled with the imminent reduction of our borrowings and debt service, are generating renewed confidence in our company," Blazer told stockholders at the Atlanta meeting late last month. "We are now in a position to think about growth again and have begun to search for the location of our next Harry's in A Hurry stores, which we hope to open in metro Atlanta by the end of this year."
To cut its debt load, Harry's restructured its senior credit facility and retired debt with $4.3 million from last month's sale of a 17.7-acre tract in Brentwood, Tenn., where it also retained an option to repurchase a 1.4-acre site for a potential Harry's In A Hurry. Those moves, the company said, have enabled it to borrow $1 million for general corporate purposes, including expansion.
"We have worked hard to reach this stage of our turnaround," Blazer said. "More importantly, we believe our confidence in the future of this company is being shared by our lenders and others in the investment community."
Slated to close later this quarter is a $375,000 sale of an outparcel at Harry's Gwinnett County megastore, which would be used to trim debt, Harry's reported. The chain also said it expects to finalize a plan to refinance or repay the mortgage loan on its bakery and distribution facilities by July 31.