It turns out that 1994 was something of a contradiction when it comes to the share performance of the approximately 50 publicly traded food-related retailing and wholesaling companies in North America. As is shown in SN's front-page news analysis of last year's share prices, there were some big winners and some big losers. Surprisingly, Safeway shares outpaced all other food-trade stocks last year when the stocks are ranked by percentage of gain or loss. Safeway started last year at about $21 and closed at more than $31, an increase of 50.6%. The stock continued its upward march last week.
Securities analysts credited Safeway's cost-cutting measures for the stellar performance, but the strong 4% same-store sales rise gave the chain good fundamental strength as well. And that has to bode well for Safeway because, at some point, the wringing out of operational costs has to end and profit must then be made the old-fashioned way: by way of sales.
In all, nearly 20 chains showed some upside move for 1994; eight jumped more than 20%. The roster of the big-eight upside performers included such industry names as Ahold, American Stores and Smith's Food & Drug Centers. Others with double-digit gains on the year included Kroger Co. and Vons Cos.
So it's not all bad, at least for those companies, but at the same time that means about 30 companies ended up on the downside. The big loser last year was Eagle Food Centers (off 72.8%), a chain that investors apparently feared is being swamped by sharper competitors.
In all, 15 stocks ended the year down 20% or more and an additional eight were off by double-digit amounts.
Many investors have traditionally seen food stocks as safe harborage for money during uncertain times, but they may change their minds if they look too closely at last year's activity. In a stock year that was essentially flat or off -- the Dow Jones average moved up 0.54% for the year, but the S&P 500 dropped 2.32% -- the SN composite of all food-related stocks was off 18.85%, as is shown on Page 7. The SN index seeks to show industry direction based on considerations such as company share prices weighted against the number outstanding. The index also showed retailers off 20%, wholesalers off 18.4% and diversified companies off 7.72%.
But let's take a break from numbers and look at the anecdotal evidence concerning holiday-period sales for the year just past. It was reported in previous issues of SN that the overall tone of holiday sales seemed positive, but reports in this issue go deeper into specific category performance. In fact, each of the product sections of this issue has a review of sales performance by broad product categories. Here's some of what you'll find by paging through the product sections: · In Fresh Foods, starting on Page 15, bakery and deli executives told SN that shoppers were in the mood to save time this past holiday season, and were willing to pay to save it.
That translated into strong sales for items such as baked goods, party trays and the like.
· In Center Store, starting on Page 25, retailers said sales were driven upward by the fact that Christmas fell at week's end, and by fair weather in many locations. Sales of canned and frozen vegetables also benefited by increased prices for fresh products.
· In Home & Health, starting on Page 31, retailers said sales for nonfood categories such as health and beauty care, general merchandise and video were as strong as any year in recent memory. In all, good news for holiday sales -- and probably better news than from many other classes of trade.
