Price Co. to Drop Outlet in Buffalo; Its 1st Closure
Price Co., the operator of 68 Price Club discount warehouses in the United States and Canada, said it will close its Buffalo, N.Y., outlet Saturday, the first closure in the company’s 15-year history.
Price also released its third-quarter financial results Wednesday, reporting earnings of $25.2 million on revenue of $1.5 billion, compared with a profit of $23.3 million on revenue of $1.18 billion over the same quarter last year. The stock market reacted favorably with Price shares closing Wednesday at $52.50, up $1 in over the counter trading.
This year’s quarterly results were boosted by the consolidation of sales and results from 10 Price Clubs in Canada with the U.S operation.
Last Fall, Price took 100% control of the Canadian stores in which it had previously held a 50% ownership interest.
In January, Price announced it was closing the Buffalo outlet because of disappointing sales, but later decided to keep the store open after demonstrations of support by Buffalo members. On Wednesday, Price Vice President Daniel Carter said the company had reluctantly decided to go ahead with closure on June 29.
In a letter being mailed to shareholders this week, Price Chairman Robert Price said that “although employees made a maximum effort to increase sales, the progress we hoped for did not materialize.” The Buffalo location’s employees total somewhat less than the 250 average payroll at Price Clubs, he said. Some are being offered jobs at other Price locations, with the rest facing layoffs.
Despite problems in Buffalo, Price is stepping up expansion and plans to open nine new locations over the next five months. Carter declined to comment on reports that Price will soon enter the Texas market with two or three locations in the Dallas-Fort Worth area. Carter said only that the company is considering locations in Texas.
Price also reported that third quarter “same store sales”--those at Price Clubs open at least a year--declined by 0.6% from sales over the same period last year. For the first nine months of the fiscal year, same store sales declined by 0.7%.
Doug Christopher, a securities analyst with Crowell, Weedon & Co. in Los Angeles said the decline in same store sales is “not terribly alarming” given negative trends in the overall retailing industry. Up to now, Price has been following a “low growth scenario,” although the openings of more Price Clubs later this year should boost growth, Christopher said.
For the first three quarters of the fiscal year, Price earnings were $100 million on revenue of $5.03 billion, compared with profits of $93.5 million on revenue of $4.09 billion over the same three quarters last year.
