Albertsons Trims ’04 Profit Outlook; Shares Fall
Albertsons Inc. warned Friday that 2004 profit would be less than expected and blamed a range of factors, including the effect of hurricanes on its stores in the Southeast and lingering pain from the California grocery strike.
It was the second time in three months that the Boise, Idaho-based grocery and drugstore operator has issued downbeat profit forecasts. Albertsons’ shares fell $1.05, or 4.6%, to $22.01 on the New York Stock Exchange.
Including the effect of the hurricanes, Albertsons, which has 10% of its 2,500 stores in Southern California, said it expected to report a profit of $1.29 to $1.31 a share for the fiscal year that ended Jan. 29. In December, the company said it expected profit to come in at the low end of a range of $1.40 to $1.50.
Analysts were expecting profit of about $1.36 a share, according to Thomson First Call. The company is scheduled to release earnings March 15.
In 2003, Albertsons reported net income of $1.51 a share.
Among its other troubles, Albertsons also blamed the profit decline on a less severe flu season, which resulted in slower pharmacy sales, and the settlement of new labor contracts in Northern California and Las Vegas, which required bonus payouts.
The grocery chain also said it anticipated a fourth-quarter charge to correct some lease-accounting issues. Albertsons said it was working with its accountants to determine the amount of the charge, which stems from new views on lease accounting practices expressed in a Feb. 7 letter from the Securities and Exchange Commission to an accountants trade group.
Albertsons also said it expected to report a slight decline in same-store sales -- a key gauge of supermarket performance that excludes new or replacement stores -- for the fiscal year.
That contrasts with other grocery chains such as Safeway Inc., which includes the Vons and Pavilions supermarkets. On Thursday, Safeway reported that it swung to a profit in the fourth quarter that ended Jan. 1 and said it was on the way to recovering from the supermarkets’ labor problems in California.
On Oct. 11, 2003, the United Food and Commercial Workers union struck Vons and Pavilions stores in Southern and Central California. Union workers at stores owned by Albertsons and Kroger Co.’s Ralphs unit were then locked out. During the 4 1/2 -month dispute, about 59,000 workers were idled at 852 stores.
Some analysts have said Albertsons’ aggressive moves to expand its market share are hurting earnings. Albertsons last year acquired the upscale Bristol Farms grocery chain.
