Vons Cos. on Monday posted its first quarterly profit in more than a year, rebounding from difficulties that have beset the supermarket company since it bought Safeway's Southern California stores in August, 1988.
For the fourth quarter of 1989, Vons reported net income of $3 million on sales that climbed 5.7% to $1.24 billion. A year earlier, the company lost $16.2 million during the quarter.
"They seem to be out of the woods and gaining momentum," said Jonathan Ziegler, an analyst with the investment firm Sutro & Co.
Even so, for all of 1989, Vons' losses deepened to $25.1 million on sales that rose 33% to $5.2 billion. In 1988, the El Monte-based company lost $23.9 million.
Most of the yearlong shortfall stemmed from unexpectedly high one-time charges of $23.8 million, including $11.1 million in the fourth quarter. The charges covered, among other things, the cost of meshing the Vons and Safeway operations.
Vons also is saddled with high interest payments for $839 million in debt, much of it from the $408-million acquisition of 162 Safeway stores 19 months ago.
Ziegler said he was encouraged, however, by sales gains at the former Safeway stores as well as at Vons' other operations. In 1989, sales were up 9.7% at the acquired stores and 4.3% at other Vons outlets open more than one year.
The company, the leading supermarket concern in Southern California with a market share of roughly 25%, operates stores under the Vons, Pavilions, Pavilions Place and Tianguis names. It did not break out results for the individual chains.
In a prepared statement released through Vons' headquarters in El Monte, Chairman and Chief Executive Roger E. Stangeland said the company has shown improvement every quarter since it acquired the Southern California Safeway stores. "These strong fourth-quarter results verify that we have turned the corner on the integration process," he said. "With the integration project substantially complete, we look forward to continuing improvement in 1990 and beyond."
The company's stock, which has climbed since hovering in the $18-$19 range for most of February, rose another 25 cents Monday to close at $21.75 on the New York Stock Exchange.
Other supermarket chains also have reported strong results recently. Ziegler attributed the industrywide gains to improved management, and said that supermarkets may be taking away some business from restaurants.
Salt Lake City-based American Stores, which owns the Lucky and Alpha Beta stores in Southern California along with other chains across the country, on Monday reported that its fourth-quarter earnings more than doubled to $53.1 million from $20.2 million a year earlier.
Sales climbed 14% to $6.1 billion. Also, American's fourth quarter included 14 weeks in 1989 versus 13 weeks in 1988.
For the year, American's earnings rose 20.2% to $118.1 million on sales that climbed 19.1% to $22.0 billion.