Albertson’s third-quarter earnings fall 30 percent, hurt by Gulf Coast hurricanes
BOISE, Idaho – Albertson’s Inc., the nation’s second biggest supermarket chain, said Tuesday that its third-quarter earnings fell 30 percent, hurt by the Gulf Coast hurricanes, pressure from rivals including Wal-Mart Stores Inc. and flat sales.Net income declined to $77 million, or 21 cents per share, for the three months ended Nov. 3, from $110 million, or 30 cents per share, in the year-ago period. Earnings from continuing operations totaled $81 million, or 22 cents per share, compared with $107 million, or $1.08 per share in 2004.The earnings missed analyst expectations for a second quarter in a row and Albertson’s reduced its full-year profit outlook, adding to pressure on the Boise-based grocer to find a buyer to help it turn around a slumping business hurt by competition from Wal-Mart Stores Inc.Chief Executive Officer Larry Johnston, on a Tuesday morning conference call, told investors he’s still exploring “strategic options” after putting the company up for sale in September.”While earnings are bad and sales are bad, the company is still looking to sell the business. That’s what’s most relevant for the stock,” said Jason Whitmer, an analyst at FTN Midwest Research in Cleveland with a “neutral” rating on the shares. “There will be a point, if the business continues to deteriorate or even worse, falls off a cliff, and in the next six months no deal is announced, that Albertsons is in big trouble.”Albertson’s shares rose 19 cents to $24.85 in morning trading on the New York Stock Exchange. Albertson’s stock has fallen nearly 7 percent since climbing above $26 in September after the company announced it was looking for a buyer.Excluding the impact of the three hurricanes that hit Louisiana, Texas, and Florida during the quarter, earnings from continuing operations totaled $91 million, or 24 cents per share.Wall Street analysts had expected the company to earn 27 cents per share on sales of $10 billion, according to Thomson Financial.Total sales slipped to $9.95 billion versus $9.97 billion a year ago. Total same-store sales, or sales at locations open at least one year, declined 0.4 percent.”It was a challenging quarter,” Johnston told investors, adding the company lost ground to rivals in regions where Albertson’s isn’t the largest supermarket. “Competitive pressure was intense in many of our markets.”The company, second only to Kroger Co. among supermarket-only chains, earned $284 million, or 76 cents a share, for the first nine months of the year, up from $249 million, or 67 cents a share, a year ago.Nine-month sales rose to $30.13 billion from $28.76 billion a year ago.Albertson’s narrowed its profit guidance for fiscal 2005 to between $1.37 and $1.40 per share, excluding items, from a prior view of $1.37 to $1.47. Analysts expect the company to earn $1.31 for the year. The company also reaffirmed its outlook for positive same-store sales for the year.Albertson’s also said it is on track to complete the consolidation of its Northern California distribution operations, and will see a gain from the transaction of about $51 million in the fourth quarter.The company said it also is on track to meet its goal of $1.25 million in cost savings by the end of fiscal year 2006 after booking $71 million in new cost reductions during the third quarter.Cincinnati-based Kroger is due to release its earnings Dec. 6.