GRAND RAPIDS, Mich. — Spartan Stores here is counting on a vigorous remodeling program to boost performance in fiscal 2009.
Upgrading stores formerly belonging to G&R Felpausch — the family-owned Spartan distribution customer acquired by Spartan a year ago — will be a major focus of planned capital spending of around $60 million in the fiscal year, which began March 30, officials of Spartan said.
“We will be working on the highest number of major store remodels, new or relocated stores, and the opening of new fuel centers since I joined the company in 2003,” Craig Sturken, chief executive officer of Spartan, said during a conference call reviewing fourth quarter and fiscal year-end earnings earlier this month. “Although the bulk of our retail capital investments will be devoted to the Felpausch stores, we have also identified excellent market growth opportunities for select Family Fare, D&W and Glen's Markets stores, and we'll be allocating capital to those stores accordingly.”
Spartan said it expects to complete three major remodels in the current quarter, and then tackle two such projects in the second quarter, and three more in the third quarter. Spartan defines major remodels as projects representing investments of more than $1.5 million. Spartan also plans to build two or three new fill-in or replacement stores during the fiscal year.
Spartan earlier this month officially opened the doors at a Family Fare store in Paw Paw, Mich., which formerly operated under the Felpausch banner. Spartan said it would rebrand one former Felpausch store under it upscale D&W Fresh Market banner. In addition, a Glen's Market location in northern Michigan will undergo a renovation in which certain elements of the D&W prototype will be replicated.
“We're going to put together a store that has the best of both [Glen's and D&W],” explained Dennis Eidson, president and chief operating officer of Spartan. “It will allow us for the first time in northern Michigan to have a program in place that will cater to the upscale customer.”
Officials called D&W stores Spartan's best-performing banner during fiscal 2007. Spartan acquired D&W in 2006 and positioned it as the company's upscale offering. Although the economy in Michigan has been difficult, D&W has benefited from upscale customers who have been cutting down on eating out, said Dave Staples, chief financial officer.
As reported previously in SN, Spartan posted a 12.5% annual sales increase to $2.5 billion. In the current fiscal year, the company expects comparable retail store sales to increase in the low single digits, excluding the effect of the Easter holiday, which because of timing occurred during the first and fourth quarters of fiscal 2008 but will not occur at all in fiscal 2009.
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