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BOISE, Idaho - Albertson's, Inc. reported first-quarter 2004 earnings from continuing operations today of $56 million, or 15 cents per diluted share -- 3 to 5 cents above company guidance and four cents above First Call Consensus. In the prior year's quarter, earnings from continuing operations totaled $173 million, or 47 cents per diluted share.
First-quarter net earnings were affected by several one-time charges, according to Albertsons:
- The Southern California labor dispute reduced the earnings for the first quarter by 27 cents per share. This included the impact to operations, a contribution to the health and welfare trust, and a contract ratification bonus.
- Other one-time charges in the first quarter related to the Southern California division included legal costs of two cents per share and a one-cent-per-share multiyear workers' compensation adjustment. Both of these charges were unconnected to the labor dispute.
- Costs related to the reorganization of the Dallas/Ft. Worth division reduced earnings by one cent per share.
- The company's exit from the New Orleans market reduced earnings from discontinued operations by five cents per share, primarily due to noncash impairment write-downs associated with the sales of property and equipment.
Excluding these items, first-quarter earnings from continuing operations would have been 46 cents per diluted share.
Albertsons reported total sales of $8.7 billion for the quarter vs. last year's first-quarter sales of $8.9 billion. The company estimates that the Southern California labor dispute negatively affected total sales by approximately $386 million in the first quarter. Total comparable-store sales for the quarter (including the impact of the labor dispute) declined 3.7 percent, and identical-store sales declined 4.1 percent.
Excluding the Southern California stores involved in the labor dispute, total company comparable-store sales for the quarter increased 0.3 percent, and identical-store sales decreased 0.1 percent.
"We are pleased with our progress during the first quarter," said chairman, c.e.o., and president Larry Johnston. "Comparable-store sales and market share excluding stores involved in the Southern California labor dispute continued to grow. The labor dispute in Southern California was settled successfully, and our sales recovery is ahead of plan, driven by the launch of dual branding and aggressive merchandising. In addition, since the end of the quarter we closed the acquisition of Shaw's and the integration process is on schedule."
In a major cost control program initiated by the company in mid-2001, Albertsons continued to stay ahead of schedule to reduce costs by $1 billion before the end of 2005. Through the first quarter of 2004, $710 million in savings had been achieved.
Cash flow from operations in the first quarter grew 7.1 percent to $407 million from $380 million last year.
During the first quarter, Albertsons continued its capital expenditure program, opening 22 new stores and completing 12 remodels, ending the first quarter with 2,307 stores, not including the 204 stores Shaw's operated as of April 29, since the acquisition closed on the first day of the second quarter.
During the quarter Albertsons continued to make progress in several key areas:
- Dual branding was launched in Southern California in conjunction with a combined Albertsons/Sav-On loyalty card.
- Shop-N-Scan, the company's personal shopping technology system, launched in 105 stores in the Dallas/Ft. Worth market.
- e-Commerce home delivery service launched in the ACME division.
- 28 new "Renaissance" format drug stores turned in strong operating results.
- Private label product penetration increased by 31 basis points, driven both by the company's new premium private label line, Essensia, and first brand products.
- The Blue Ribbon Beef program drove a double-digit beef category sales increase in the first quarter.
- Steakhouse Choice, a new high-quality brand of USDA Choice Angus Beef, was launched on April 15.
- The decision to exit the New Orleans market was announced during the quarter in a continuous effort to evaluate and improve the asset portfolio.
These and other initiatives contributed to market share improvement vs. traditional competitors, as measured by ACNielsen, of 20 basis points outside of Southern California.