JP Foodservice Inc. of Columbia saw its stock jump more than 5 percent yesterday after a strong quarterly earnings report, driven by sales growth four times faster than the pace the company had predicted after going public in late 1994.
JP Foodservice, a restaurant supply business that used to be part of Sara Lee Corp., said it earned $1.4 million on sales of $295.8 million during the three months that ended March 30, compared with $1.5 million in the same period last year. The quarter is the third in the company's fiscal year.
The number was stronger than it looked on the surface for two reasons. First, it included a nonrecurring expense of $900,000 to explore an unsolicited offer from Sara Lee to sell JP its remaining food service businesses. The talks ultimately ended without a deal. The other reason was that Wall Street had expected a negative impact from the bad winter weather and none occurred, chief financial officer Lewis Hay said.
"We held up despite the weather and that's why we got a pop," Mr. Hay said. He said JP Foodservice's sales grew up to three times as fast as some competing companies despite having more of its business in parts of the country slammed by blizzards in January.
The company's sales grew 14.4 percent, including 12.5 percent from the company's existing businesses. The other 2 percent represented sales of companies JP acquired since last year's first quarter.
"The growth rate of JP's core sales [excluding acquisitions] is now in the 16 to 18 percent range, which far exceeds that of any of its competitors," Smith Barney analyst Michael Rietbrock told his firm's sales force after the announcement.
The stock closed up $1.25 at $20.25.
Mr. Hay, who in a 1995 interview predicted that sales from existing operations would rise 3 percent annually and mergers would add another 3 percent to total sales, said the extra growth has come from steady investment in boosting the size of the company's sales force and the development of private label products that increase customer loyalty to JP by offering items restaurants can't get elsewhere.
Pub Date: 4/25/96