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Stater Says Minor Remodels Effective

SAN BERNARDINO, Calif. — Stater Bros Markets here said its “dollhouse remodels” are producing only slight sales increases, “but we’re trying to fight off competition and make the stores nicer for customers rather than looking for huge lifts in sales,” Dave Harris, senior vice president and chief financial officer, told analysts Tuesday during a conference call.


The “dollhouse” program, which involves minor remodels at stores in the 24,400-square-foot to 30,000-square-foot range, encompassed five stores last year and another 10 through the first half of this year, with 12 more scheduled before the end of the year. 

Jack Brown, chairman and chief executive officer, said the remodeling program is scheduled to be completed by the end of fiscal 2014.

He said Stater will be closing a store here — its first closing in 25 years. “It’s in an area where the landlord was unwilling to spend money to fix it up,” he explained.

Stater continues to be the low-price leader among conventional operators, Brown said. In response to a question, he said the chain is priced 6 points below other full-service chains “and probably close to 10 points” above Wal-Mart in certain categories.

For the second quarter that ended March 31, net income fell 29.4% to $11.6 million, while sales rose 2.6% to $961.9 million and same-store sales, excluding the shift of Easter from last year’s third quarter, increased 1.4%. The company said the shift boosted sales in the quarter by approximately $11.3 million.

For the first half, net income dropped 54.6% to $17.1 million, while sales increased 1.7% to $1.9 billion and same-store sales, excluding the Easter shift, rose 1.1%.

The company said it is continuing to sacrifice margin to keep customer counts up while the economy is slow in hopes of retaining those customers when the economy recovers.  As a result, gross margins were down 90 basis points to 26.9% of sales for the quarter and down 102 basis points to 27.4% for the half.

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