Fiscal 2002
Change
Fiscal 2001
Change
Fiscal 2000
1 US dollar Euro
1.06
(5.0)
1.12
2.9
1.09
- Fiscal 2002
Net sales in the U.S. retail trade operations increased by EUR 1.9 billion, or 7.4%, to EUR 27.8 billion in fiscal 2002
compared to fiscal 2001. As discussed above, net sales in fiscal 2002 were significantly affected by the full-year
consolidation of Bruno's. Excluding the acquisition of Bruno's, net sales increased in fiscal 2002 compared to fiscal 2001
as a result of strong net sales growth at Stop Shop and Giant-Carlisle. In the southeastern United States, we experienced
challenges to net sales growth at identical stores and the newly acquired Bruno's stores mainly due to increased
competition and the weakened economy. Net sales were negatively affected by the difference in exchange rates of the
US dollar and Euro between fiscal 2002 and fiscal 2001. Excluding the impact of currency exchange rates, net sales in
the U.S. retail trade operations would have increased by EUR 3.2 billion, or 13.1%, in fiscal 2002 compared to net sales
in fiscal 2001.
Operating income in the U.S. retail trade operations decreased by EUR 34 million, or 2.4%, to EUR 1.4 billion in fiscal
2002 compared to fiscal 2001. As a percentage of net sales, operating income was 5.0% in fiscal 2002 compared to
5.5% in fiscal 2001. Gross profit, as a percentage of net sales, increased slightly in fiscal 2002 compared to fiscal 2001.
Operating expenses in fiscal 2002 were significantly affected by impairment charges in fiscal 2002 in the amount of
EUR 128 million relating to Bruno's. Operating expenses, as a percentage of net sales, increased in fiscal 2002 compared
to fiscal 2001. Higher expenses were offset in part by savings realized as we benefited from shared service initiatives at
Tops and Giant-Carlisle and from a full-year of procuring products and services, not intended for resale but used within our
own business, through our centralized group, NFR. Excluding the impact of currency exchange rates, operating income
would have increased by EUR 29 million, or 2.1%, in fiscal 2002 compared to operating income in fiscal 2001.
- Fiscal 2001
Net sales in the U.S. retail trade operations increased by EUR 3.1 billion, or 13.8%, to EUR 25.9 billion in fiscal 2001
compared to fiscal 2000 mainly due to the opening of 67 new and replacement stores, along with the acquisition of
56 Grand Union stores and other smaller acquisitions noted below. Additionally, we experienced strong net sales growth in
fiscal 2001 at identical stores. Differences in exchange rates between the US dollar and Euro had a favorable impact on
net sales in fiscal 2001. Excluding the impact of currency exchange rates, net sales would have increased by EUR 2.5
billion, or 10.8%, in fiscal 2001 compared to net sales in fiscal 2000.
Operating income in the U.S. retail trade operations increased by EUR 325 million, or 29.2%, to EUR 1.4 billion in fiscal
2001 compared to fiscal 2000. Gross profit, as a percentage of net sales, increased in fiscal 2001 compared to fiscal
2000, as we began to purchase more of our perishable products for our U.S. retail trade operations through a centralized
buying office, PPO, which allows us to negotiate prices based on volume purchasing. Operating expenses, as a percentage
of net sales, remained relatively constant as we controlled our expenses through various initiatives, including further
centralization of administrative office processes such as benefits management and other accounting functions. We also
started a centralized group, NFR, to negotiate contracts on behalf of our retail trade operations for services and products
used within our own business, such as fixtures and store equipment, which allows us to purchase more efficiently and
lowers our operating expenses. Excluding the impact of currency exchange rates, operating income would have increased
by EUR 292 million, or 25.6%, in fiscal 2001 compared to operating income in fiscal 2000.
Retail trade: Stop Shop
We acquired Stop Shop in July 1996. Stop Shop, which is headquartered in Quincy, Massachusetts, was established
in 1914 and pioneered the superstore concept in New England in 1982. In February 2001, Stop Shop acquired 36
supermarkets from C&S Wholesale Distributors, which previously purchased the locations from Grand Union. The
supermarkets are located mainly in New Jersey and New York and were converted to the Stop Shop format during the
first quarter of fiscal 2001. During fiscal 2000, the "Edwards" chain, which previously formed a part of Giant-Carlisle,
was converted to the Stop Shop format, except for four stores that were transferred to Giant-Landover. As of the end of
fiscal 2002, Stop Shop operated 333 superstores and conventional supermarkets in Massachusetts, Connecticut, Rhode
Island, New Jersey and New York. Stop Shop operates conventional supermarkets and 55,000-75,000 sq. ft.
superstores, some of which include gas stations, full-service pharmacies, portrait studios and one-hour photo developing.
Additionally, Stop Shop and Peapod have teamed up to provide an internet-based home shopping and grocery delivery
service under the brand name "Peapod by Stop Shop."
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