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Roundy’s Q1 Comps Get Sacked

MILWAUKEE — Citing heightened price competition and difficult comparisons — including sales aided by the Green Bay Packers’ march to the 2011 Super Bowl — Roundy’s Supermarkets said comparable-store sales fell by 2.1% in the fiscal first quarter.

The retailer said it expects the sales slowness to continue for the foreseeable future, and lowered its estimated comps for the fiscal year to a decrease of 0.5% to 1.5%. Previous forecasts said comps would be flat to negative 1%. Roundy’s also lowered its profit estimate, saying it will need to invest more in price to keep up with competitors.

“From a promotional perspective, in all the major markets the competitive activity is stepped up, both from conventional and alternative channels,” Robert Mariano, Roundy’s chairman, president and chief executive officer, said in a conference call with analysts discussing the results for the quarter, which ended March 31. “The climate has changed and ramped up, because everyone kind of had soft first weeks of the quarter, and everybody ran to the doors at the same time. In conjunction with that, we saw softer consumer spending and right now, we don’t see that abating.”

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With shoppers cautious, retailers of all stripes are targeting food trips, he added.

“The consumer is not at all secure in terms of what’s going to happen, so they’re not particularly willing to spend freely,” Mariano said. “And I think it’s important to note that not any one particular competitor became more competitive. There’s no mistake that every [retailer] is going for that grocery shopping trip.”

On the positive side, Mariano said Roundy’s higher-end Mariano’s Fresh Market stores in Chicago are continuing to show strong sales — in excess of $1 million weekly. Roundy’s currently has five Mariano’s open and is “more convinced than ever” the chain can find additional growth opportunities there, Mariano said.

Analyst Scott Mushkin of Jefferies & Co. shared Mariano’s enthusiasm for the Chicago stores.

“While Mariano’s remains small, Roundy’s actually exceeded our sales expectations due to the strength of its Chicago banner,” Mushkin said in a research note. “This store, which offers a vast array of high-quality produce, meat and specialty/organic items, coupled with very competitive pricing on ubiquitous branded products, is clearly hitting the right notes with the Windy City consumer.”

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Overall sales for the period climbed 2.4% to $938.2 million. Net income of $2.3 million was down by 74.1%, but when adjusted for one-time expenses and an $8 million charge for debt extinguishment, earnings increased by 20.4%.

Comparable-store sales declines attributable to Super Bowl sales in the prior year and the timing of the New Year’s holiday totaled nearly 0.9%, officials said.

“Our first-quarter results reflect the strength of our overall business strategy,” Mariano said. “Despite continued weakness in consumer discretionary spending, which negatively impacted our same-store sales, we were pleased with our total sales growth and solid performance in the Chicago market.”

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