Arden Group, Inc. Announces Second Quarter Earnings

Arden Group, Inc. (Nasdaq:ARDNA) today released its sales and income figures for the second quarter ended June 29, 2013.

Arden Group, Inc. is the parent company of Gelson’s Markets which currently operates 16 full-service supermarkets in Southern California carrying both perishable and grocery products.

ARDEN GROUP, INC. AND CONSOLIDATED SUBSIDIARIES

SECOND QUARTER EARNINGS RELEASE

(UNAUDITED)

Thirteen Weeks Ended

Twenty-Six Weeks Ended

June 29,

June 30,

June 29,

June 30,

(In Thousands, Except Share, Per Share & Footnote Data)

2013

2012

2013

2012

        
      
      
        
          Sales
        
        
          (a)
        
        
        
        
          $
        
        
          111,031
        
        
           
        
        
        
        
          $
        
        
          107,699
        
        
        
        
          $
        
        
          224,686
        
        
           
        
        
        
        
          $
        
        
          214,926
        
      
      
        
          Operating income
        
        
          (b)
        
        
        
        
        
        
          8,185
        
        
        
        
        
        
        
        
          8,236
        
        
        
        
        
        
          15,528
        
        
        
        
        
        
        
        
          13,133
        
      
      
        
          Interest, dividend and other income (expense), net
        
        
        
        
        
        
           
        
        
          (7
        
        
          )
        
        
        
        
           
        
        
          25
        
        
        
        
           
        
        
          (2
        
        
          )
        
        
        
        
           
        
        
          48
        
      
      
        
          Income before income taxes
        
        
        
        
        
        
        
        
          8,178
        
        
        
        
        
        
        
        
          8,261
        
        
        
        
        
        
          15,526
        
        
        
        
        
        
        
        
          13,181
        
      
      
        
          Income tax provision
        
        
        
        
        
        
           
        
        
          3,332
        
        
           
        
        
        
        
           
        
        
          3,366
        
        
        
        
           
        
        
          6,326
        
        
           
        
        
        
        
           
        
        
          5,370
        
      
      
        
          Net income
        
        
        
        
        
        
          $
        
        
          4,846
        
        
           
        
        
        
        
          $
        
        
          4,895
        
        
        
        
          $
        
        
          9,200
        
        
           
        
        
        
        
          $
        
        
          7,811
        
      
      
        
          Basic and diluted net income per common share
        
        
        
        
        
        
          $
        
        
          1.58
        
        
        
        
        
        
          $
        
        
          1.59
        
        
        
        
          $
        
        
          3.00
        
        
        
        
        
        
          $
        
        
          2.54
        
      
      
        
          

Basic and diluted weighted average common shares outstanding

        
        
        
        
        
        
        
        
          3,071,000
        
        
        
        
        
        
        
        
          3,071,000
        
        
        
        
        
        
          3,071,000
        
        
        
        
        
        
        
        
          3,071,000
        
      
    
    
      
        
        
        
           
        
        
        
      
      
        
          (a)
        
        
        
        
          Same store sales from the Company’s 16 supermarkets (excluding the 
          Pasadena location which was closed June 15, 2013) were $107,994,000 
          during the second quarter of 2013 compared to $104,207,000 in the 
          second quarter of 2012, an increase of 3.6%. The increase in same 
          store sales is due to an increase in the number of transactions, as 
          well as inflation, but was partially offset by a shift in holiday 
          sales. Easter and Passover sales occurred in the second quarter of 
          2012 but fell into the first quarter of 2013. For the twenty-six 
          weeks ended June 29, 2013, same store sales (which also excludes the 
          Northridge location which was closed on February 25, 2012, in 
          addition to the Pasadena store mentioned above) were $218,050,000 
          compared to $206,294,000 in the same period of 2012, an increase of 
          5.7%. The year-to-date increase in same store sales is the result of 
          inflation, as well as an increase in the number of transactions in 
          2013 compared to the prior year.
        
      
      
        
           
        
      
      
        
        
        
        
        
          In September 2012, Gelson’s entered into a lease for a supermarket 
          location in the marina area of Long Beach, California. Gelson’s took 
          possession of the property on March 1, 2013. Gelson’s is in the 
          process of extensively remodeling the site and currently anticipates 
          opening a new Gelson’s supermarket at that location in late 2013.
        
      
      
        
           
        
      
      
        
          (b)
        
        
        
        
          Operating income in the second quarter of 2013 decreased slightly 
          primarily due to higher stock appreciation rights (SARs) 
          compensation expense and the timing of the Easter and Passover 
          holidays as described above. The Company recorded SARs compensation 
          expense of $670,000 in the second quarter of 2013 due to an increase 
          in SARs fair value since the beginning of the quarter and additional 
          vesting. Conversely, in the second quarter of 2012, the Company 
          reversed $170,000 of SARs compensation expense recognized in prior 
          periods. Operating income also decreased due to an increase in the 
          United Food & Commercial Workers International Union (UFCW) health 
          and welfare and pension contribution rates at various times 
          throughout 2012 and 2013. The negative impact of higher SARs 
          compensation expense and union benefits costs on operating income 
          was offset by the positive impact of higher sales.
        
      
      
        
           
        
      
      
        
        
        
        
        
          Operating income in the first half of 2013 and 2012 reflects the 
          impact of two store closures – the Pasadena and Northridge 
          locations. Closing costs of $170,000 and $1,906,000 related to the 
          closing of the Pasadena and Northridge stores were accrued in the 
          first half of 2013 and 2012, respectively. Excluding the costs 
          related to store closings, operating income increased by 4.4% in the 
          first half of 2013 compared to the same period of 2012. This 
          increase is the result of higher sales, slightly improved gross 
          margins and a decrease in store expense as a percent of sales. The 
          decrease in store expense as a percent of sales is due to an 
          increase in sales without a comparable increase in expense, as well 
          as the closing of unprofitable locations. The increase in operating 
          income was partially offset by an increase in SARs compensation 
          expense, increased UFCW benefit contribution rates and a UFCW bonus 
          of approximately $768,000 paid in March 2013. The Company recorded 
          SARs compensation expense of $1,110,000 in the first half of 2013. 
          Conversely, in the first half of 2012, the Company reversed $434,000 
          of SARs compensation expense recognized in prior periods.
        
      
    
    

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. Certain statements contained in this Current Report on Form 8-K are forward-looking statements. These statements discuss, among other things, the opening of a new location which may or may not be accomplished. These forward-looking statements reflect the Company’s current plans and expectations and are based on information currently known to the Company. The Company cautions readers that any forward-looking statements contained in this Current Report involve risks and uncertainties and are subject to change. The Company does not undertake any obligation to update forward-looking statements.