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BOISE, Idaho -- The hurricanes that rocked the Southeast are still ringing in the ears of Albertsons execs. The chain yesterday cited the after effects of the hurricanes as it revised its 2004 earnings guidance downward, saying it expects earnings from continuing operations in the range of $1.29 to $1.31 per share.
In December, the chain had said it expected total year earnings would be in the lower end of a $1.40 to $1.50 guidance range.
Excluding the negative impact from the hurricanes, Albertsons said guidance for earnings per share from continuing operations would have been in the range of $1.33 to $1.35 per share.
It added it now also expects total year comparable store sales to be slightly positive, and total year identical store sales to be slightly negative.
Earnings and sales for the fourth quarter were impacted by several factors, according to Albertsons:
1. The settlement of labor contracts in Sacramento, the Bay Area and Las Vegas late in, or following the end of, the quarter, obligated Albertsons to make ratification bonus payments.
2. A weaker-than expected flu season, which continued through January, had a negative impact on pharmacy and OTC business. At fiscal year end, Albertsons operated approximately 1,300 pharmacies in its food combination stores and 700 stand-alone drug stores.
3. Gains from the new Southern California labor contract were offset by higher-than anticipated promotional investments to regain share. The company said that even though IRI data indicates it is the only one of the grocers involved in the nearly 5-month 2003-2004 Southern California labor dispute that has share of market exceeding pre-strike levels, its earnings have not yet rebounded as planned.
4. Promotional investments and the competitive environment in several divisions were stronger than expected as the battle for market share continued through the end of the fourth quarter.
5. The absence of a Super Bowl in the fourth quarter of 2004 had a larger than anticipated negative impact on sales and earnings.
6. The above factors were partially offset by positive earnings from the chain's Shaw's acquisition, and its improved tax rate.
Albertsons will announce fourth quarter and full year 2004 financial results on March 15.
The chain yesterday also said it expects to incur a non-cash lease expense correction in its fourth quarter of 2004, a correction which stems from the company's review of its accounting for leases in light of views expressed by the chief accountant of the Securities and Exchange Commission in a February 7 letter to the American Institute of Certified Public Accountants regarding certain operating lease issues and their application under generally accepted accounting principles.
Albertsons is currently working with its independent registered accounting firm to quantify the impact of the change and expects to complete its review by the end of next week, but does not believe the change will be material to the its results of operations or cash flows for any individual prior year, and does not expect a restatement.