Weis Markets to Invest $125 Million to Remodel, Build New Stores

by Nate Hunter

SUNBURY, Pa. — Grocer with stores in rural Mid-Atlantic states prospered in 2011 and plans to purchase three Genuardi’s.

Weis Markets plans to undertake 18 major remodels of its stores this year, which the company announced during its annual shareholder meeting.SUNBURY, Pa.  — Weis Markets, a supermarket chain based in Sunbury, announced it will invest $125 million in building and renovating its stores this year — a 25 percent increase compared to 2011.

The plan was announced during the company’s annual shareholder meeting Thursday. Vice chairman Jonathan Weis says the budget includes two new stores and 18 major remodels.

Among the projects underway this year is a new 65,400-square-foot Weis Market in Fogelsville, Pa., which is currently under construction. The market will be the first grocery store for residents in the Fogelsville area and will open in 2013.

“In addition, we expect to soon complete the purchase of three Genuardi’s units near Philadelphia, which we hope to reopen later this summer,” says Weis.

The company agreed to buy the supermarkets from Safeway Inc. in February. The Pennsylvania stores are located in Conshohocken, Doylestown and Norristown and will operate under the Genuardi’s Family Markets name until the deal is finalized.

Douglas Green, a principal at Philadelphia-based Michael Salove & Associates, a retail real estate brokerage firm, says the remodeling strategy undertaken by Weis will help the company remain competitive in today’s marketplace.

“Weiss is certainly a very old chain and one that has its roots in central Pennsylvania,” says Green. “It’s the same reason that any grocery, restaurant or retail chain remodels — the stores need a facelift. They haven’t spent capital on their stores for quite some time.” Another reason for the remodeling stems from increasing pressure from competing grocers across the Northeast.

On the acquisitions front, there is also the possibility to grow market share, such as the sale of Genuardi’s. Safeway is phasing out the Genuardi’s brand and has sold 16 of the locations to Giant Food Stores. “The supermarket industry is experiencing tremendous change and I think Weis feels like the timing is right to invest capital,” says Green.

While Giant Foods remains the dominant grocer in the Philadelphia market, stores such as Wegmans Foods Markets are introducing new concepts that are pulling business away from traditional supermarkets and convenience stores. Wegmans retail concept marries a large supermarket that competes on price with an equally large prepared-food section. Discount grocer Bottom Dollar is also pursuing locations in the region. In the past 24 months, the company has added more than 30 stores to the greater Philadelphia region.

“With Wegmans, the Genuardi’s and Giant consolidation and with Bottom Dollar aggressively pushing into the market, I think Weis is looking at this as evolve or fall by the wayside,” says Green.

During the shareholder meeting, Weis and CEO David Hepfinger also reviewed the company’s 2011 results.

Weis says that while customers are still adversely affected by the poor economy, the company managed to prosper last year. Net income in 2011 increased by nearly 11 percent and comparable store sales rose 4.2 percent.

Hepfinger adds, “For the third consecutive year, we posted strong net income and operating income increases. We attribute these results to our record capital expenditure investments in our store base, improved efficiencies and operating discipline in the overall management of our stores, store increases in our sales per customer and more comprehensive sales building program during key holiday periods, particularly in the fourth quarter.”

Weis Markets was founded as Weis Pure Foods in 1912 by two brother, Harry and Sigmund Weis. Today, Harry’s son, Robert, and his grandson, Jonathan, oversee the company, which includes 159 stores in Pennsylvania, Maryland, new York, New Jersey and West Virginia. Many of the stores are located in rural areas and small towns.

According to Hepfinger, in the past three years, the company has upgraded two-thirds of its store base. The stock price of Weis Markets closed at $44.58 on Thursday, well above the 52-week low of $36.52 per share and near the 52-week high of $45.52.

— Liz Burlingame

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