Roundy’s Inc., the Milwaukee-based parent company of the Pick ‘n Save grocery chain reported third quarter net income of $3.8 million, or 8 cents per share, down from $7.9 million, or 18 cents per share, in the same period a year ago.
The company’s quarterly net sales grew 1.1 percent to $984.2 million.
Roundy’s operating and administrative expenses as a percentage of net sales increased to 23.9 percent in the third quarter from 23.2 percent a year ago. The increase was primarily due to increased marketing costs related to the roll-out of the company’s Fresh Perks and Milwaukee renewal marketing campaign, increased bonus expense, increased occupancy and labor costs related to new stores, as well as reduced fixed cost leverage in the company’s core business resulting from lower sales. The increased bonus expense compared to the prior year was primarily due to an accrual adjustment last year that reduced the expense in the prior year quarter.
“During the third quarter, our core market stores continued to be impacted by the effects of both competitive square footage growth over the last four quarters and the weak economy,” said Robert Mariano, chairman, president and chief executive officer of Roundy’s. “In addition, we incurred an unusual amount of incremental marketing and advertising expenses associated with our Milwaukee Renewal effort and higher promotional activity. Despite these headwinds, our sales cadence improved throughout the third quarter and this has continued into the fourth quarter. These results give us confidence that our customer centric initiatives are resonating with consumers and we believe we are making the right long term decisions in order for us to stabilize our core markets and position us more positively heading into 2014.”
Mariano added, “In our Chicago market, we continue to be pleased with the strong sales and profitability trends of our Mariano’s banner. We recently opened two additional stores after the end of the third quarter, which brings our total count of Mariano’s stores to 13, with five of the stores in the City of Chicago and eight in suburban locations. We are on track to open an additional five stores in 2014 for a total of 18 Mariano’s locations.”
