ETOBICOKE, Ontario -- Oshawa Group here said net income rose 14% in the second quarter ended Aug. 6.
$1) in the 16-week quarter. Total sales rose 4.5% to $1.36 billion. Food distribution sales increased 5% to $1.27 billion in the quarter and drug store sales fell 2.1% to $88.9 million.
Oshawa, in a statement, said earnings in its Western region benefited from the absence of last year's price war in Alberta. The Eastern region reaped the benefits of the successful integration of businesses Oshawa acquired in Quebec in fiscal 1993, including 23 former Steinberg stores and the wholesale business of Aligro.
"In the Central region, intense price competition following the settlement of a competitor's strike kept margins under pressure," the company said.
Sales gains resulted from existing businesses, as well as acquired food-service operations, Oshawa said. In addition, advances in prescription sales by the company's Pharma Plus Drugmarts "substantially offset a decline in tobacco revenues." Oshawa said margin pressures from traditional competitors and new-format entries may affect near-term results, but it expects to benefit over time from new marketing initiatives and operational refinements.
Denyse Chicoyne, a securities analyst in the Montreal office of Nesbitt Burns, Toronto, said Oshawa had felt margin pressure in Ontario because of a price war A&P initiated following the settlement, earlier this year.