NEW YORK (TheStreet) -- Smart & Final (SFS) - Get Smart & Final Stores, Inc. Report, a California-based grocery and food service chain, Tuesday announced plans to open 100 new stores in the highly competitive grocery space. The announcement came as Smart & Final marked its one-year anniversary as a public company at the New York Stock Exchange.
Dubbed "Project 100," Smart & Final's expansion will take place over the next four years in the Western U.S.
The company's CEO isn't worried about the competition. "The reason we can compete the way we do as a value retailer is because we have a really low cost structure," said CEO David Hirz. "Our stores are smaller than most at 25,000 feet, they're high productivity, no service departments, and we price really competitively in the markets, so we think value is the new normal."
In its latest quarterly earnings report, Smart & Final reported a 9.3% increase in net sales, with a 3.5% gain in same store sales. The company also reported deflation in a few of its product categories, which Hirz said has continued into the third quarter.
"In a deflationary environment, we've been really happy with where margins have ended, and pricing power has still been very strong for us," said Hirz. Gross margins rose more than 10% in the last quarter.
Smart & Final's new expansion plan will focus on its "Extra!" and "Cash & Carry" format stores, and will create 5,000 new jobs.
Hirz said the planned minimum wage increase in California early next year will not impact the company.
"We pay very competitive wages in every market that we operate (in)," said Hirz. "Our average hourly associate makes almost $14 an hour, so we're much less impacted by minimum wage increases and we think the minimum wage increase could put extra dollars into the hands of that value consumer."
On another topic, Hirz has not seen a boost to the company's bottom line from lower gas prices, he said.