SALT LAKE CITY -- Smith's Food & Drug Centers is opening four retail warehouse stores in Las Vegas, and if the discount stores are successful the concept could be expanded into its other market areas.
the remaining two stores will open in July. The store banner is PriceRite Grocery Warehouse. "What we do with that type of store will depend upon how well they do," Smith said.
Robert Bolinder, Smith's executive vice president of corporate planning and development, added that if the 50,000-square-foot retail warehouse stores are profitable, "we'll probably put a sprinkling of them in other markets," including New Mexico and Arizona.
Smith's is seeing more of these types of stores in markets where it now operates, Bolinder said. "For us they could be another competitive weapon in our arsenal."
Smith's acquired two of the store locations from Megafoods Stores, Mesa, Ariz. Another is being built, while the fourth store is an existing Smith's location that is being remodeled.
The four warehouse openings represent a more ambitious program than first announced. Last December Bolinder told SN that Smith's planned to open one warehouse store by the middle or latter part of 1995 and would examine its results before committing to others.
Jonathan Ziegler, a securities analyst with Salomon Bros., New York, said Smith's selected Las Vegas for its first warehouse stores because of the lack of such competition there. He said he expects Smith's to learn from the first PriceRite stores in Las Vegas and to expand the format into other regions next year. Smith's also released operating results for its first quarter ended April 1.
Sales for the quarter totaled $746.7 million, a 1% decline from $753.8 million last year. Net income for the same period reached $9.5 million, up 1% from $9.4 million last year.
Same-store sales dropped 5.5% for the quarter, a development the company blamed in part on pre-Easter
sales that this year fell in the second quarter as opposed to the first quarter last year.
Smith's said that, adjusted for Easter, the decrease in comparable store sales was estimated at 4%.
"And adjusted for Easter, sales for the quarter would have been up slightly," said Matthew G. Tezak, senior vice president and chief financial officer.
Stuart Rosenthal, Smith's new president and chief operating officer, said a fair amount of the decline in same-store sales was due to the continued weakness of the company's California operations and not a reflection of what happened in Smith's primary operating territory.
Tezak said Smith's spent $147 million in capital expenditures in 1994, remodeling, opening new stores and replacing equipment. He added that the company is budgeted to spend $125 million in capital expenditures in both 1995 and 1996, he said.
So far this year Smith's has opened six combination food and drug centers in Mesa and Phoenix, Ariz.; Vista, Calif.; Gallup and Hobbs, N.M., and Gardnerville, Nev.
It plans to open six to eight additional stores during the remainder of 1995 in Arizona, New Mexico and Nevada.