Tops Friendly Markets late Tuesday said net losses deepened in the fiscal third quarter as it incurred increased expenses acquiring and opening several new stores, while same-store sales slipped due to effects of deflation.
The Williamsville, N.Y.-based company posted a loss of $12.7 million on sales of $537.7 million for the 12-week period, which ended Oct. 8. While net sales were up by 1.4% from last year's third quarter, the loss expanded from $5.2 million last year, as operating expenses as a percent of net sales increased 150 basis points to 28.5%.
Seven acquired and new locations, including four former Stop & Shop and Hannaford stores acquired in New York and Massachusetts as those companies merged, drove many operating expense lines higher, the company said. Administrative expenses were up $4.1 million, reflecting transaction-related costs of $2.5 million as well as incremental legal and professional fees of $2.3 million related to a dispute over a Teamsters pension fund.
Same-store sales in the period decreased by 2.9%, reflecting product price deflation.
“We continued to build the Tops franchise and brand in the quarter with the acquisition of seven stores and the launch of an expanded and revitalized portfolio of Tops Brand products,” Frank Curci, Tops chairman and CEO, said in a statement. “The stores we acquired in Eastern New York and North central Massachusetts strengthened and expanded our geographic footprint and are expected to be highly accretive and improve operating leverage once rebranding is completed and merchandising programs are up and running in the latter part of the fourth quarter and into 2017.”
For the 40-week period to date, Tops total sales are up 0.1% to $1.9 billion (sales excluding gasoline are up by 1.6%), while the company posted a loss of $30.8 million. For the same period last year, Tops lost $46.8 million.