Exhibit 99.1
Albertsons Announces Third Quarter Results
Comparable Store Sales Decline 0.8% ... but Increase +0.7% Excluding Labor
Disputes
Private Label Penetration Continues to Grow
Toys R Us Conversions Accelerate
eCommerce Service Expands to New Markets
BOISE, Idaho, Dec. 5 /PRNewswire-FirstCall/ -- Albertsons, Inc.
(NYSE: ABS), one of the world's largest food and drug retailers, today
announced net earnings of $92 million or $0.25 per diluted share for the third
quarter of Fiscal 2003. Net earnings for the third quarter of 2002 were $188
million or $0.47 per diluted share. Fiscal 2003 year-to-date net earnings
were $426 million or $1.16 per diluted share versus $280 million or $0.69 per
diluted share in the year earlier.
Results for the quarter were materially impacted by two labor disputes,
particularly the ongoing labor dispute with the UFCW in Southern California.
Larry Johnston, Chairman, CEO and President, commented on the results.
"While the labor disputes negatively impacted our overall results we were
pleased with the underlying performance of our business. Without the labor
disputes, we believe we were on track to meet the First Call Consensus of
Industry Analysts. Most importantly, comparable and identical store sales,
excluding the labor disputes, were positive in the third quarter, indicating
the underlying strength of our marketplace programs and the improving
economy."
The Company reported that total sales grew 1.6% or $139 million during the
quarter, reaching $8.796 billion versus last year's third quarter sales of
$8.657 billion. Until the Southern California labor dispute, the Company was
on track to exceed its forecasted sales targets for the third quarter of 2003
both in total and in Southern California (a "strike-affected" market).
Assuming that this level of performance had continued throughout the quarter,
the Company believes that this labor dispute negatively impacted total sales
by $132 million. Fiscal 2003 year-to-date total sales were $26.789 billion
versus $26.519 billion in the year earlier.
Total Company comparable store sales (including the impact of the labor
disputes), declined 0.8 % and identical store sales declined 1.1 % ...
however, when adjusted for the labor disputes, total Company comparable store
sales increased 0.7 % and identical store sales increased 0.3 %.
Total gross profit for the quarter was essentially flat at $2.526 billion
this quarter versus $2.529 billion a year ago. Gross profit as a percent of
total sales declined 49 basis points for the quarter to 28.72 % from 29.21 %
in the same period of last year. Gross profit rates declined as a result of
the labor disputes coupled with continued investments in pricing and
promotion. The declines however, were positively offset by gross margin
benefits generated from supply chain savings, private label growth and
improved pharmacy margins.
Until the Southern California labor dispute, the Company was exceeding its
forecasted gross profit targets for the third quarter of 2003 in total and in
the strike-affected market. Assuming that this level of performance had
continued throughout the quarter, the Company believes that the labor disputes
negatively impacted gross profit by $70 million.
During the quarter, selling, general and administrative expenses totaled
25.78 % of sales versus 24.86 % in the third quarter of 2002, driven by the
costs of and lost sales leverage due to labor disputes, increased insurance
and benefit costs and higher worker's compensation costs.
On the cost front, the Company continued to stay ahead of its schedule to
meet its $750 million cost-out target by the end of 2004. Through the third
quarter, $567 million in savings has been achieved since the program began.
During the quarter, the Company continued to make advances in a number of
marketing initiatives. Market share versus traditional competitors as
measured by A.C. Nielsen grew 20 basis points outside of Southern California.
Over the course of the quarter, the Company also re-set over 800 stores with
Toys R Us merchandise, increased private label sales penetration by 50 basis
points versus prior year and expanded its internet grocery service to both the
Dallas/Ft. Worth and Boise markets, making the Company's on-line grocery
service area the largest in the nation. The Company also continued its
deployment of self-checkout lanes, bringing the total number of self-checkout
lanes installed to over 1,000, located in 260 stores.
Albertsons is one of the world's largest food and drug retailers, with
annual revenues of approximately $36 billion. Based in Boise, Idaho, the
Company employs more than 200,000 employees and operates approximately 2,300
retail stores in 31 states across the United States, under banners including
Albertsons, Jewel-Osco, Acme, Albertsons-Osco, Albertsons-Sav-on, Sav-on
Drugs, Osco Drug, Max Foods, and Super Saver.
Pursuant to the requirements of Regulation G, the Company is attaching a
reconciliation of adjusted comparable and identical store sales to the most
directly comparable GAAP financial measures. We caution investors not to
place undue reliance on these non-GAAP financial measures or the statements of
expectation regarding third quarter results contained in this release as these
results and expectations are not necessarily indicative of actual results that
would have been achieved had the third quarter continued without labor
disputes, particularly the Southern California labor dispute.
Certain statements made in this press release, including statements
regarding the Company's expected financial performance, are forward-looking
information as defined in the Private Securities Litigation Reform Act of
1995. In reviewing such information about the future performance of the
Company, it should be kept in mind that actual results may differ materially
from those projected or suggested in such forward-looking information since
predictions regarding future results of operations and other future events are
subject to inherent uncertainties. These statements may relate to, among
other things: non-GAAP financial measures included in this release; statements
of expectation regarding the third quarter 2003 results had the labor dispute
in Southern California not occurred; investing to increase sales; changes in
cash flow; increases in insurance and employee benefit costs; attainment of
cost reduction goals; impacts of the Southern California labor dispute;
achieving sales increases and increases in comparable and identical sales;
opening and remodeling stores; and the Company's five strategic imperatives.
These statements are indicated by words or phrases such as "expects," "plans,"
"believes," "estimate," and "goal." In reviewing such information about the
future performance of the Company, it should be kept in mind that actual
results may differ materially from those projected or suggested in such
forward-looking information.
Important assumptions and other important factors that could cause actual
results to differ materially from those set forth in the forward-looking
information include changes in consumer spending; actions taken by new or
existing competitors (including nontraditional competitors), particularly
those intended to improve their market share (such as pricing and promotional
activities); labor negotiations, particularly the result of negotiations
related to the current labor dispute in Southern California; adverse
determinations with respect to litigation or other claims (including
environmental matters); employee benefit costs; the Company's ability to
recruit, retain and develop employees; the Company's ability to develop new
stores or complete remodels as rapidly as planned; the Company's ability to
implement new technology successfully; stability of product costs; the
Company's ability to integrate the operations of acquired or merged companies;
the Company's ability to execute its restructuring plans; the Company's
ability to achieve its five strategic imperatives; and other factors affecting
the Company's business in or beyond the Company's control. These other
factors include changes in the rate of inflation; changes in state or federal
legislation or regulation; the cost and stability of energy sources; changes
in the general economy; and changes in interest rates.
Other factors and assumptions not identified above could also cause the
actual results to differ materially from those projected or suggested in the
forward-looking information. The Company does not undertake to update
forward-looking information contained herein or elsewhere to reflect actual
results, changes in predictions, assumptions, estimates or changes in other
factors affecting such forward-looking information.
ALBERTSONS, INC.
(Unaudited - In millions)
Comparable Store Sales Reconciliation
Actual Adjusted
Comparable Labor Dispute Comparable
Store Sales Adjustment Store Sales
-------------------------------------------------------------------------
2003 Third Quarter $8,460 $(280) (1) $8,180
2002 Third Quarter 8,528 (402) (2) 8,126
-------------------------------------------------------------------------
Year to Year Change (68) 54
2002 Third Quarter 8,528 8,126
-------------------------------------------------------------------------
Comparable Store Sales Percent (0.8%) 0.7%
====== ======
Identical Store Sales Reconciliation
Actual Adjusted
Identical Labor Dispute Identical
Store Sales Adjustment Store Sales
-------------------------------------------------------------------------
2003 Third Quarter $8,348 $(274) (3) $8,074
2002 Third Quarter 8,443 (397) (4) 8,046
-------------------------------------------------------------------------
Year to Year Change (95) 28
2002 Third Quarter 8,443 8,046
-------------------------------------------------------------------------
Identical Store Sales Percent (1.1%) 0.3%
====== ======
(1) Represents the change in comparable Southern California Division food
and drug store sales in 2003 during the last 19 days of the third
quarter. Includes the effect of minimal incremental benefits in
Southern California drug store sales during the last 19 days of the
quarter that the Company believes were due primarily to the labor
dispute. The third quarter labor dispute outside of Southern
California did not impact sales.
(2) Represents the change in comparable Southern California Division food
and drug store sales in 2002 during the last 19 days of the third
quarter.
(3) Represents the change in identical Southern California Division food
and drug store sales in 2003 during the last 19 days of the third
quarter. Includes the effect of minimal incremental benefits in
Southern California drug store sales during the last 19 days of the
quarter that the Company believes were due primarily to the labor
dispute. The third quarter labor dispute outside of Southern
California did not impact sales.
(4) Represents the change in identical Southern California Division food
and drug store sales in 2002 during the last 19 days of the third
quarter.
ALBERTSONS, INC.
(Unaudited - In millions, except per share data)
Condensed Consolidated Earnings Statements
13 Weeks Ended 13 Weeks Ended
October 30, 2003 October 31, 2002
------------------------------------------------------------------------
Sales $8,796 100.00% $8,657 100.00%
Cost of sales 6,270 71.28 6,128 70.79
------------------------------------------------------------------------
Gross profit 2,526 28.72 2,529 29.21
Selling, general and
administrative expenses 2,267 25.78 2,151 24.86
Restructuring charges
(credits) 4 0.04 (7) (0.09)
------------------------------------------------------------------------
Operating profit 255 2.90 385 4.44
Other (expenses) income:
Interest, net (99) (1.13) (88) (1.00)
Other, net (7) (0.08) 1 --
------------------------------------------------------------------------
Earnings from continuing
operations before income
taxes 149 1.69 298 3.44
Income tax expense 57 0.65 108 1.25
------------------------------------------------------------------------
Earnings from continuing
operations 92 1.04 190 2.19
Discontinued operations:
Operating loss -- -- (10) (0.11)
Gain (loss) on disposal 7 0.08
Income tax benefit -- -- 1 0.01
------------------------------------------------------------------------
Earnings (loss) from
discontinued operations -- -- (2) (0.02)
------------------------------------------------------------------------
Earnings before cumulative
effect of change in
accounting principle 92 1.04 188 2.16
Cumulative effect of change
in accounting principle
(net of tax of $60) -- -- -- --
------------------------------------------------------------------------
Net Earnings $92 1.04% $188 2.16%
========================================================================
Earnings (Loss) Per Share:
Basic
Continuing operations $0.25 $0.48
Discontinued operations -- (0.01)
Cumulative effect of
change in accounting
principle (net of tax
of $0.15) -- --
----- -----
Net Earnings $0.25 $0.47
===== =====
Diluted
Continuing operations $0.25 $0.48
Discontinued operations -- (0.01)
Cumulative effect of
change in accounting
principle (net of tax of
$0.15) -- --
----- -----
Net Earnings $0.25 $0.47
===== =====
Weighted Average
Common Shares Outstanding:
Basic 368 396
Diluted 369 397
39 Weeks Ended 39 Weeks Ended
October 30, 2003 October 31, 2002
------------------------------------------------------------------------
Sales $26,789 100.00% $26,519 100.00%
Cost of sales 19,063 71.16 18,736 70.65
------------------------------------------------------------------------
Gross profit 7,726 28.84 7,783 29.35
Selling, general and
administrative expenses 6,732 25.13 6,420 24.21
Restructuring charges
(credits) (11) (0.04) (29) (0.11)
------------------------------------------------------------------------
Operating profit 1,005 3.75 1,392 5.25
Other (expenses) income:
Interest, net (307) (1.15) (296) (1.11)
Other, net (6) (0.02) (16) (0.06)
------------------------------------------------------------------------
Earnings from continuing
operations before income
taxes 692 2.58 1,080 4.07
Income tax expense 266 (0.99) 415 1.56
------------------------------------------------------------------------
Earnings from continuing
operations 426 1.59 665 2.51
Discontinued operations:
Operating loss -- -- (49) (0.19)
Gain (loss) on disposal (388) (1.46)
Income tax benefit -- -- 146 0.55
------------------------------------------------------------------------
Earnings (loss) from
discontinued operations -- -- (291) (1.10)
------------------------------------------------------------------------
Earnings before cumulative
effect of change in
accounting principle 426 1.59 374 1.41
Cumulative effect of change
in accounting principle
(net of tax of $60) -- -- (94) (0.35)
------------------------------------------------------------------------
Net Earnings $426 1.59% $280 1.06%
========================================================================
Earnings (Loss) Per Share:
Basic
Continuing operations $1.16 $1.64
Discontinued operations -- (0.72)
Cumulative effect of change
in accounting principle
(net of tax of $0.15) -- (0.23)
----- -----
Net Earnings $1.16 $0.69
===== =====
Diluted
Continuing operations $1.16 $1.64
Discontinued operations -- (0.72)
Cumulative effect of change
in accounting principle
(net of tax of $0.15) -- (0.23)
----- -----
Net Earnings $1.16 $0.69
===== =====
Weighted Average
Common Shares Outstanding:
Basic 368 403
Diluted 369 405
Percentages may not sum due to rounding differences.
ALBERTSONS, INC.
(Unaudited - In millions)
Condensed Consolidated Balance Sheet Data
October 30, 2003 October 30, 2002
-------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $43 $430
Inventories 3,191 3,042
Assets held for sale 68 189
Other current assets 898 845
-------------------------------------------------------------------------
Total Current Assets 4,200 4,506
Other assets 293 332
Goodwill and intangibles, net 1,596 1,583
Land, buildings and equipment, net 9,158 8,964
-------------------------------------------------------------------------
Total Assets $15,247 $15,385
======= =======
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $1,898 $2,137
Current portions of long-term
debt and capital lease obligations 516 140
Other current liabilities 1,367 1,301
-------------------------------------------------------------------------
Total Current Liabilities 3,781 3,578
Long-term debt 4,448 4,953
Capital lease obligations 313 296
Other long-term liabilities
and deferred credits 1,379 1,107
Stockholders' equity 5,326 5,451
-------------------------------------------------------------------------
Total Liabilities and Stockholders'
Equity $15,247 $15,385
======= =======
Total Common Shares
Outstanding at End of Period 367 386
Condensed Consolidated Cash Flow Data
39 Weeks Ended 39 Weeks Ended
October 30, 2003 October 30, 2002
--------------------------------------------------------------------------
Cash Flows From Operating
Activities:
Net earnings $426 $280
Adjustments to reconcile
net earnings to net cash
provided by operating activities:
Depreciation and amortization 729 708
Discontinued operations noncash
charges -- 372
Cumulative effect of change in
accounting principle -- 94
Net deferred income taxes and other 15 58
Changes in operating assets and
liabilities (110) 213
--------------------------------------------------------------------------
Net cash provided by
operating activities 1,060 1,725
--------------------------------------------------------------------------
Cash Flows From Investing Activities:
Capital expenditures (892) (1,050)
Proceeds from disposal of land,
buildings and equipment 56 91
Proceeds from disposal of assets
held for sale 98 472
Other (8) 10
--------------------------------------------------------------------------
Net cash used in investing
activities (746) (477)
--------------------------------------------------------------------------
Cash Flows From Financing Activities:
Cash dividends paid (210) (232)
Payments on long-term borrowings (115) (116)
Stock purchases and retirements (108) (547)
Proceeds from stock options exercised -- 16
--------------------------------------------------------------------------
Net cash used in financing
activities (433) (879)
--------------------------------------------------------------------------
Net (Decrease) Increase in Cash
and Cash Equivalents (119) 369
Cash and Cash Equivalents
at Beginning of Period 162 61
--------------------------------------------------------------------------
Cash and Cash Equivalents at
End of Period $43 $430
==========================================================================
SOURCE Albertsons, Inc.
-0- 12/05/2003
/CONTACT: media, Albertsons Public Affairs, +1-208-395-6392, or analysts,
Nick Kormeluk, +1-208-395-6622, both of Albertsons, Inc./
(ABS)
CO: Albertsons, Inc.
ST: Idaho
IN: REA SUP FOD MLM ECM
SU: ERN