Richmond, VA - Richfood Holdings, Inc. announced record third quarter net earnings of $17.6 million, or $0.37 per share, assuming dilution, for the twelve-week period ended January 10, 1998, a 17.2% increase over net earnings of $15.0 million, or $0.31 per share, assuming dilution, for the prior year quarter. Net earnings for the thirty- six week period ended January 10, 1998, were $47.1 million, or $0.99 per share, assuming dilution, a 17.7% increase over net earnings of $40.0 million, or $0.84 per share, assuming dilution, for the prior year period.
Sales for the third quarter of fiscal 1998 were $744.0 million, a 7.8% decrease from sales of $807.3 million for the third quarter of fiscal 1997. The decrease was primarily attributable to the previously announced expiration of a frozen food supply agreement in June 1997. Wholesale sales were also impacted by competitive store openings that affected certain of the Company's customers. Fiscal 1998 year-to-date sales were $2.20 billion versus sales of $2.30 billion for the prior year period. The decrease was principally attributable to the loss of the frozen food supply agreement referred to above, offset, in part, by sales from the Norristown produce business, which was acquired by Richfood on September 30, 1996.
John E. Stokely, President and Chief Executive Officer, commented, "The third quarter earnings that we are reporting stands as Richfood's 32nd quarter of record earnings, reflecting our continued commitment to efficient, low-cost operations. A relatively slow sales environment, particularly in the Southeast, was a challenge this quarter, but our associates did a first rate job of servicing our customers during the important holiday season, while improving productivity in key operating areas. We continue to find ways to take costs out of our operations. As a result, our expense structure is in excellent shape, which stands to benefit both our customers and our shareholders. We are well positioned as we enter the final quarter of fiscal 1998."
As of November 26, 1997, the Company entered into a definitive agreement to acquire substantially all of the assets and assume certain liabilities of Farm Fresh, Inc., a privately held supermarket chain headquartered in Norfolk, Virginia. The purchase price is expected to consist of approximately $220 million cash, plus the value of certain assumed capital leases, plus 1.5 million warrants for the purchase of shares of Richfood common stock. The transaction, which is expected to close in late February, 1998, will be effected through a "prepackaged" Chapter 11 bankruptcy proceeding, which was commenced by Farm Fresh in the United States Bankruptcy Court for the District of Delaware on January 7, 1998.
Stokely commented, "We are extremely excited about the upcoming Farm Fresh transaction and are poised to exploit the opportunities that this combination offers both Richfood and Farm Fresh. This acquisition represents a further step in Richfood's ongoing strategy of pursuing strategic acquisitions in the Mid-Atlantic operating region and will unite the premier wholesale distributor in this region with the premier retail grocer in the Tidewater region."
Richfood Holdings, Inc., headquartered in Richmond, Va., is the largest wholesale food distributor in the Mid-Atlantic operating region. The Company provides a full range of grocery, dairy, frozen food, produce, meat and non- food items to chain and independent retailers throughout the region. The Company also operates a chain of sixteen retail grocery stores in the metropolitan Baltimore area.
Forward-looking statements in this news release, if any, are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain important factors that could cause results to differ materially from those anticipated by the forward-looking statements are discussed from time to time in reports filed by the Company with the Securities and Exchange Commission.
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