Smith's Food & Drug Centers Inc. reported net income of $10.4 million, or 41 cents per share, in the first quarter ended March 30, up 28 percent over the $8.1 million, or 32 cents per share, reported for the period last year.
Company directors increased the regular quarterly dividend to 9 cents per common share, or 36 cents annually, the first of which was paid to stockholders on March 15.Sales for the first quarter totaled $533 million, up 9 percent over $488 million for the same quarter last year. Sales in comparable stores increased 3 percent over the first quarter of the prior year.
Gross margins increased slightly to 21.9 percent from 21.6 percent, and net margins increased to 1.95 percent compared to 1.67 percent for the same quarter last year.
The company said the relatively small increase in sales resulted from closing 18 stores during fiscal 1990 and the timing of the 1991 store expansion program. Unlike previous quarters, no new stores were opened during the first quarter of 1991.
A company spokesman said the 1991 expansion plan is to open two stores during the second quarter, four stores in the third quarter and eight to 11 stores during the fourth quarter, including the company's first stores in Southern California.
Only one store is planned to close during the year, which the company said "substantially completes" its store replacement program.
Improvements in gross margins and net margins were caused by several factors, the company said. Stores opened during recent years have continued to build volume, which added to profitability. The stores closed during the same period have been the company's less profitable stores. Also customers purchased more private label products, which cost the customer less yet yield higher profit margins to the company.