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BOISE, Idaho -- Impact from four hurricanes and uncertainty about the future of the company's assets negatively impacted Albertsons' third quarter performance, the retailer said yesterday.
Total sales for the quarter were $9.9 billion, essentially flat compared to last year's third quarter revenue. Total comparable store sales were -0.4 percent and identical store sales were -0.5 percent for the quarter.
Third quarter earnings totaled $81 million or 22 cents per share; but when adjusted for the 3 cents per share impact of the three hurricanes that hit Louisiana, Texas, and Florida during the quarter, they totaled $91 million or 24 cents per share. In the prior year's third quarter, earnings from continuing operations totaled $107 million or 29 cents per diluted share. After adjustment for the impact of four 2004 hurricanes that hit Florida, earnings from continuing operations were $117 million or 32 cents per share.
Gross margin for the quarter increased to 28.1 percent versus 27.9 percent last year, primarily the result of modifications to the Check the Price program, improved pharmacy margins, and shrink reduction.
The retailer is still on track to meet its $1.25 billion cost reduction goal by the end of fiscal year 2006, recording $71 million in new cost reductions during the third quarter of 2005, bringing the total cost reduction achieved since mid-2001 to $1.1 billion.
During the quarter, the company opened seven new stores, closed 18, and remodeled were closed, and 41s were completed. A total of 2,476 stores were operating at the end of the quarter.
Highlights during the third quarter:
-- Albertsons successfully piloted avenu, an integrated media and marketing network designed to meet specific customer needs with the right offer at the right time, in its Jewel-Osco division. Following installation in all Jewel-Osco division stores, a company-wide avenu rollout will begin in 2006.
-- It continued to deploy Six Sigma with more than 100 Black Belts managing nearly 300 projects in every functional area of the business by quarter end.
-- The successful Renaissance drugstore format continued to expand in both standalone and combo stores. At quarter's end, a total of 158 drug stores and drug sections of combo stores featured elements of the Renaissance format.
-- It introduced 130 new products under the Albertsons' equaline and HomeLife private label brands.
Prior to the quarter's end, Albertsons made progress toward completing the consolidation of its Northern California distribution operation. The retailer consummated the sale of its San Leandro, Calif. DC and entered into a leaseback arrangement to facilitate the transition to a streamlined distribution operation in Northern California. The net cash proceeds of $94 million were applied to reduce Albertsons outstanding commercial paper borrowings. Albertsons will recognize a pre-tax gain of approximately $51 million from the transaction in the fourth quarter.
Albertsons narrowed its earnings guidance to between $1.37 and $1.40 per share, down from $1.37 to $1.47 per share for fiscal year 2005. These expected results include the impact of the San Leandro sale.