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Promotion Woes Sink Roundy’s Q3

MILWAUKEE — Roundy’s Supermarkets here said its third-quarter sales and profitability were down in part because a promotion based on the Monopoly board game failed to capture its shoppers’ attention the same way it did a year ago.

Net earnings of $7.9 million for the 13-week quarter that ended Sept. 29 were down 35.8%. Sales of $974 million decreased by 0.3%, reflecting a 3.6% decline in same-store sales, offset by sales from new stores.

Roundy’s said it would reduce its quarterly dividend to 12 cents per share from 23 cents in a move to strengthen its balance sheet and increase financial flexibility as it continues to expand its Mariano’s Fresh Market business and pay down debt. The company also lowered its full-year guidance on earnings growth, saying per-share earnings will likely be in the range of $1.05 to $1.12 versus previous estimates of $1.10 to $1.24.

More news: Mariano's Opens Greektown Site

Amid more competitive market pricing activity, Roundy’s shoppers did not respond as enthusiastically as hoped to the Monopoly game during the quarter.

Robert Mariano, Roundy’s chairman, president and chief executive officer. said the flop showed that Roundy’s promotional strategies need to be more flexible, especially with the consumer — and competitors — under stress.

Both Pick’n Save in Wisconsin and Rainbow in Minneapolis are feeling effects from Wal-Mart Stores’ price comparison campaign. In Wisconsin, where Pick’n Save is directly targeted, Pick’n Save is responding by focusing on service differentiators as well as price, using local newspaper wrap-arounds. In the Twin Cities, where Supervalu’s Cub Foods is Wal-Mart’s comparison target, Roundy’s faces a more promotional posture than usual from Cub.

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