SOBEYS SLATES LARGE INVESTMENT IN STORES

STELLARTON, Nova Scotia -- Sobeys here said it expects to increase capital spending in fiscal 2003 by nearly 43% to $396 million (U.S.), with 75% of the total going into retail store projects.The company said it spent $277 million in the just-ended fiscal year to open 20 new corporate stores and 35 new franchised stores, enlarge 33 stores and renovate or rebanner 106 locations.Bill McEwan, president

STELLARTON, Nova Scotia -- Sobeys here said it expects to increase capital spending in fiscal 2003 by nearly 43% to $396 million (U.S.), with 75% of the total going into retail store projects.

The company said it spent $277 million in the just-ended fiscal year to open 20 new corporate stores and 35 new franchised stores, enlarge 33 stores and renovate or rebanner 106 locations.

Bill McEwan, president and chief operating officer, said 10 of the new stores were opened in western Canada, "and we intend to double that number [in that region] in the next fiscal year."

He said rebannering activity involved conversions of 64 stores in Ontario to the Price Chopper logo; 40 Green Gables convenience stores in Atlantic Canada to the Needs banner; and 31 IGA stores in Quebec to the IGA extra banner.

Other banner consolidations are scheduled for Ontario and elsewhere, McEwan said, though he declined to pinpoint which banners would be involved because not all store personnel have yet been made aware of the pending changes, he said. "But we intend to have fewer banners with a greater focus," he noted.

For the fiscal year ended May 4, sales on continuing operations rose 6.2% to $6.4 billion (U.S.) and operating earnings climbed 55.4% to $93.3 million, excluding its food-service division, which was sold in January to Sysco Corp., Houston.

For the quarter, sales on continuing operations rose 3.7% to $1.6 billion, and operating earnings rose 46.5% to $24.5 million.

McEwan said all regions experienced sales growth, and total financial results exceeded the company's targets. He said he attributed the results to improved national and regional merchandising effectiveness; lower distribution costs resulting from improved service levels and reduced supply chain costs; streamlined administrative and operating expenses; a more aggressive capital spending program; and the sale of the food-service division.

He said Sobeys expects sales for fiscal 2003 to increase 6.8% and earnings to grow 12% to 16%.