Richmond, VA - Richfood Holdings announced record earnings for its fiscal year ended May 2, 1998. Earnings for the fifty-two week fiscal year ended May 2, 1998, were $69.2 million, or $1.45 per share, assuming dilution. This represents a 12.8% increase over earnings of $61.4 million, or $1.29 per share, assuming dilution, for the fifty-three week fiscal year ended May 3, 1997.
These results exclude the effect of the previously announced one-time charge for restructuring costs related to the closing of the Company's West Point, Pennsylvania frozen food distribution facility in the fourth quarter of fiscal 1998, and an extraordinary loss related to the early redemption of certain debt in the fourth quarter of fiscal 1997. Net earnings, including the effects of the restructuring costs, were $54.7 million, or $1.15 per share, assuming dilution, for fiscal 1998, compared to net earnings, including the effects of the extraordinary loss, of $59.5 million, or $1.25 per share, assuming dilution, for fiscal 1997.
Sales for fiscal 1998 were $3.20 billion, a 6.1% decrease from sales of $3.41 billion for fiscal 1997. This decrease is primarily attributable to the extra week of sales in fiscal 1997, which was a fifty-three week fiscal year, and the previously announced expiration of a frozen food supply agreement in June 1997. Sales were positively influenced by sales generated by Richfood's Farm Fresh retail grocery stores, which were acquired on March 4, 1998, and the continued expansion by several of Richfood's largest chain customers with the addition of new retail units.
The Company recently completed two strategic acquisitions in the retail grocery segment of its business. In March 1998, the Company completed the acquisition of 45 Farm Fresh retail grocery stores, located in the Tidewater, Richmond and Shenandoah Valley regions of Virginia. In addition, in mid- May 1998, the Company completed the acquisition of 37 Shoppers Food Warehouse stores in the Greater Washington, DC market. When combined with the Company's existing METRO stores in Baltimore, MD, Richfood now operates approximately 100 retail outlets from Delaware to Southwest Virginia.
Earnings for the sixteen week period ended May 2, 1998, were $22.1 million, or $0.46 per share, assuming dilution, excluding the restructuring charge, a 3.7% increase over earnings of $21.3 million, or $0.45 per share, assuming dilution, for the seventeen week period ended May 3, 1997, excluding the extraordinary loss in that period. Net earnings, including the effects of the restructuring charge in the fourth quarter of fiscal 1998, were $7.6 million, or $0.16 per share, assuming dilution, compared to net earnings, including the effects of the extraordinary loss in the fourth quarter of fiscal 1997, of $19.5 million, or $0.41 per share, assuming dilution. Sales for the sixteen-week period ended May 2, 1998 were $1.00 billion, a 9.9% decrease from sales of $1.11 billion for the seventeen-week period ended May 3, 1997.
During the fourth quarter of fiscal 1998, the Company recorded a $24.2 million pre-tax restructuring charge ($14.5 million, after tax) related to closing its West Point, Pennsylvania frozen food distribution facility. The restructuring plan included provisions relating to employee termination costs, write-off of goodwill, losses on certain long-term contracts as well as other exit costs and amounts required to record the asset impairment to the West Point facility, writing it down to estimated fair value less selling costs. Approximately $18 million of the charge relates to non-cash asset impairment and goodwill writedown. In closing the West Point facility, the Company is positioned to do the identical distribution volume with greater utilization of existing distribution resources. The Company had excess capacity in its frozen food operations and began servicing the retail grocery customers of the West Point facility from its Harrisburg, Pennsylvania distribution facility in April 1998.
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