SALISBURY, N.C. -- Food Lion here reported net income of $31.2 million for the first quarter ended March 26. This represented a 42.1% increase compared with income of $21.9 million in the year-ago first quarter. Last year's first quarter, however, was impacted by a November 1992 television news report critical of Food Lion's meat and deli departments.
Sales at the 1,048-store chain rose 8.9% to $1.8 billion in the recent 12-week quarter.
Same-store sales (including all comparable stores) increased 3% during the quarter. Excluding the 88 stores the retailer expects to close this year, same-store sales improved 3.5%.
Same-store sales gains were in the 5% range in January, according to observers.
The initial reaction of securities analysts was that Food Lion's earnings were a bit better than expected at 6.4 cents per share. This marked the highest per-share earnings the company has achieved since the third quarter of 1992, the period when "PrimeTime Live" broadcast its report on Food Lion.
Jack Russo, a securities analyst at A.G. Edwards Inc., St. Louis, said Food Lion is a company in transition. It will take time for it to regain its momentum.
"I think that sales number probably is one folks will be a little disappointed in," he said. "You have to keep in mind Food Lion is coming off a quarter a year ago where their same-store sales were negative 6%."
However, Russo said net earnings in the quarter exceeded his expectations.
Joseph Ronning, a securities analyst at Brown Brothers Harriman & Co., New York, said Food Lion's results indicate "things have stabilized and it's just a matter of getting back on track again."
