Exhibit 99.1
Albertsons Announces Full Year 2003 and Fourth Quarter Results
Full Year Earnings Grow 14%
Fourth Quarter Results Exceed First Call Consensus
Q4 Comparable Store Sales Grow Excluding Labor Dispute
BOISE, Idaho, March 9 /PRNewswire-FirstCall/ -- Albertsons Inc.
(NYSE: ABS) reported fiscal year 2003 net earnings today of $556 million or
$1.51 per diluted share, versus $485 million or $1.22 per diluted share in the
prior year.
For the fourth quarter of 2003, the Company reported net earnings of
$130 million, or $0.35 per diluted share. Net earnings for the fourth quarter of
2002 were $205 million, or $0.54 per diluted share. The Company estimates that
the Southern California labor dispute reduced fourth quarter net earnings by
approximately $90 million, driving a reduction in diluted earnings per share of
$0.24.
The Company reported total sales of $8.6 billion for the quarter versus last
year's fourth quarter sales of $9.1 billion. The Company estimates that the
Southern California labor dispute negatively impacted total sales by
approximately $700 million in the fourth quarter. Fiscal 2003 total sales were
$35.4 billion versus $35.6 billion in the prior year.
Total Company comparable store sales for the quarter (including the impact
of the labor dispute) declined 6.5% and identical store sales declined 6.8%.
Excluding the Southern California stores involved in the labor dispute, total
Company comparable store sales for the quarter increased 1.2% and identical
store sales increased 0.9%.
Larry Johnston, Chairman, CEO and President, commented on the results. "2003
was a challenging year that was affected by a recovering US economy, a more
competitive marketplace for food and drug retailers as well as a labor dispute
of historic proportions. Despite these obstacles, our team outperformed their
operating plan and exceeded the First Call Consensus of Industry Analysts for
both the fourth quarter and the year, which included analyst estimates of the
impact of the labor dispute. This clearly shows that our new marketing plans,
supply chain initiatives and cost control programs are continuing to gain
traction as we transform the Company."
Total gross profit for the quarter was $2.4 billion including the impact of
the labor dispute, versus $2.6 billion a year ago. Gross profit as a percent of
total sales declined 70 basis points for the quarter to 27.80% from 28.50% in
the same period of last year. The gross profit rate declined as a result of the
labor dispute. The Company estimates that the labor dispute negatively impacted
gross profit by $298 million, or 109 basis points.
During the quarter, selling, general and administrative (SG&A) expenses
totaled 24.16% of sales versus 23.91% in the fourth quarter of 2002. The
increase was driven by lost sales leverage due to the labor dispute,
depreciation, insurance and employee benefit costs.
The net impact of the labor dispute on SG&A in the fourth quarter was a cost
reduction of $154 million, or 18 basis points. The Company received a benefit to
SG&A from reduced spending on store labor in Southern California and from an
agreement the Company has in place with The Kroger Co. and Safeway Inc. These
benefits were partially offset by incremental expenses for labor dispute-related
travel, security, legal and other costs.
In a major cost control program initiated by the Company mid-2001, the
Company continued to stay ahead of its schedule to reduce costs by $750 million
before the end of 2004. Through the fourth quarter of 2003, $609 million in
savings had been achieved.
The Company has provided estimates of the Southern California labor
dispute's impact on fourth quarter results assuming that the Company would have
met forecasted targets in Southern California stores involved in the labor
dispute. The Company's assumption is based on both pre- and post-labor dispute
Company results against forecasted targets. The day before the Southern
California labor dispute began, the Company was on track to exceed its
forecasted sales and earnings targets for the third quarter of 2003 both in
total and for the Southern California stores involved in the labor dispute. In
addition, the Company exceeded its planned targets for the fourth quarter of
2003 excluding the Southern California stores involved in the labor dispute.
Based on the performance of Southern California stores involved in the labor
dispute prior to its start and the subsequent Company-wide performance excluding
those stores, the Company believes that had the dispute never occurred, the
Southern California stores involved in the labor dispute would have at least met
forecasted targets in both the third and fourth quarters of 2003. Adjusted
comparable and identical store sales figures include minimal incremental
benefits received by drug stores in Southern California.
Johnston commented on Southern California, "We are very pleased to have this
labor dispute behind us. Our Southern California associates were back at work
serving customers last Tuesday and our sales have been steadily improving since
then. We have launched a very aggressive plan to not only win loyal customers
back but also gain new customers. We believe that the launch of our new Loyalty
card, outstanding in-store conditions, a unique marketing and merchandising plan
coupled with the best associates in the industry will provide the right
ingredients to win."
In 2003, the Company continued its aggressive capital expenditure program,
opening a total of 79 new stores and completing 192 remodels. Six of these
openings and 29 remodels were completed in the fourth quarter.
During the quarter, the Company continued to make progress in several areas
critical to future success:
-- Private label product penetration increased by 77 basis points in the
quarter, driven largely by the Company's new premium private label line,
Essensia.
-- In the area of technology, the Company continued to aggressively install
self-checkout terminals as well as expand its e-commerce offering to
include nationwide floral delivery.
-- The Company experienced a 30% trend improvement in the toy category in
stores that had toy sections re-merchandised with new Toys R Us
products. Toys R Us merchandise is now available in approximately 1,900
stores.
-- A new drugstore format named "Renaissance" was launched this quarter
following a "store of the future" study by the drug division.
-- Customer service scores continued to climb as the Company passed the
other two national food retailers as measured by the American Customer
Satisfaction Index, even with the impact of the Southern California
labor dispute.
These and other initiatives contributed to market share improvement versus
traditional competitors as measured by A.C. Nielsen of 10 basis points outside
of Southern California.
In addition, the Company announced several exciting changes in the fourth
quarter intended to improve future operating results:
-- A company-wide Six Sigma program launch was announced. This new program
will focus on reducing defects and variations across key processes and
programs in every corner of the Company.
-- On the operations front, the Company announced major leadership and
structure changes to strengthen leadership ranks, remove management
layers, increase leadership spans and consolidate divisions in order to
increase operating efficiency and focus.
-- Customer service operations were centralized across all company banners
through the establishment of a company-wide customer service center in
Salt Lake City.
-- A new price impact division was formed. This will provide the Company
the ability to operate both its current traditional format and a price
format in the same cities across the U.S.
With the labor dispute now concluded, the Company has decided to reinstate
annual earnings guidance. The Company estimates that earnings for fiscal 2004
will be in a range of $1.30 to $1.40 per diluted share. This forecast includes
the known costs of the labor dispute during the first quarter as well as
expected costs of recovery in Southern California and investments in Southern
California promotions. It also assumes that the current economic and competitive
environment continues. Other factors, including any additional labor disputes
that may arise in 2004, could cause actual results to differ.
Albertsons is one of the world's largest food and drug retailers, with
annual revenues of over $35 billion. Based in Boise, Idaho, the Company employs
more than 200,000 employees and operates over 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, 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 fourth 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 Southern California labor dispute not occurred.
Comparable Store Sales Reconciliation
Actual Labor Adjusted
Comparable Dispute Comparable
Store Sales Adjustment Store Sales
2003 Fourth Quarter 8,384 (633)(1) 7,751
2002 Fourth Quarter 8,967 (1,308)(2) 7,659
Year to Year Change (583) 92
2002 Fourth Quarter 8,967 7,659
Comparable Store Sales Percent (6.5%) 1.2%
Identical Store Sales Reconciliation
Actual Labor Adjusted
Comparable Dispute Comparable
Store Sales Adjustment Store Sales
2003 Fourth Quarter 8,294 (625)(3) 7,669
2002 Fourth Quarter 8,898 (1,295)(4) 7,603
Year to Year Change (604) 66
2002 Fourth Quarter 8,898 7,603
Identical Store Sales Percent (6.8%) 0.9%
(1) Represents the change in fourth quarter 2003 comparable sales for
Southern California division stores involved in the labor dispute.
(2) Represents the change in fourth quarter 2002 comparable sales for
Southern California division stores involved in the labor dispute.
(3) Represents the change in fourth quarter 2003 identical sales for
Southern California division stores involved in the labor dispute.
(4) Represents the change in fourth quarter 2002 identical sales for
Southern California division stores involved in the 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 relate to, among other things,
predictions regarding future results of operations; non-GAAP financial measures
included in this release; statements of expectation regarding the fourth 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; 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 - Dollars in millions, except per share amounts)
Condensed Consolidated Earnings Statements
13 Weeks Ended 13 Weeks Ended
January 29, 2004 January 30, 2003
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Sales $ 8,650 100.00% $ 9,107 100.00%
Cost of sales 6,246 72.20 6,512 71.50
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Gross profit 2,404 27.80 2,595 28.50
Selling, general and
administrative expenses 2,090 24.16 2,178 23.91
Restructuring charges
(credits) 1 0.01 (8) (0.08)
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Operating profit 313 3.63 425 4.67
Other (expenses) income:
Interest, net (102) (1.18) (101) (1.11)
Other, net 3 0.03 1 0.01
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Earnings from continuing
operations before
income taxes 214 2.48 325 3.57
Income tax expense 84 0.97 126 1.37
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Earnings from continuing
operations 130 1.50 199 2.20
Discontinued operations:
Operating loss -- -- (1) (0.01)
Gain (loss) on disposal -- -- 9 0.10
Income tax expense (benefit) -- -- 2 0.03
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) from
discontinued operations -- -- 6 0.06
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Earnings before cumulative
effect of change in
accounting principle -- -- 205 2.26
Cumulative effect of
change in accounting
principle (net of tax of $60) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net Earnings $ 130 1.50% $ 205 2.26%
===================================================================================================================================
Earnings (Loss) Per Share:
Basic
Continuing operations $ 0.35 $ 0.53
Discontinued operations -- 0.01
Cumulative effect of change
in accounting principle
(net of tax of $0.15) -- --
------- -------
Net Earnings $ 0.35 $ 0.54
======= =======
Diluted
Continuing operations $ 0.35 $ 0.53
Discontinued operations -- 0.01
Cumulative effect of change
in accounting principle
(net of tax of $0.15) -- --
------- -------
Net Earnings $ 0.35 $ 0.54
======= =======
Weighted Average
Common Shares Outstanding:
Basic 368 379
Diluted 370 380
ALBERTSONS, INC.
(Unaudited - Dollars in millions, except per share amounts)
Condensed Consolidated Earnings Statements
52 Weeks Ended 52 Weeks Ended
January 29, 2004 January 30, 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Sales $35,436 100.00% $35,626 100.00%
Cost of sales 25,306 71.41 25,248 70.87
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Gross profit 10,130 28.59 10,378 29.13
Selling, general and
administrative expenses 8,822 24.90 8,598 24.13
Restructuring charges
(credits) (10) (0.03) (37) (0.10)
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 1,318 3.72 1,817 5.10
Other (expenses) income:
Interest, net (409) (1.15) (396) (1.11)
Other, net (3) (0.01) (16) (0.04)
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Earnings from continuing
operations before
income taxes 906 2.56 1,405 3.94
Income tax expense 350 0.99 540 1.51
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing
operations 556 1.57 865 2.43
Discontinued operations:
Operating loss -- -- (50) (0.14)
Gain (loss) on disposal -- -- (379) (1.06)
Income tax expense (benefit) -- -- (143) (0.40)
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) from
discontinued operations -- -- (286) (0.80)
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings before cumulative
effect of change in
accounting principle -- -- 579 1.63
Cumulative effect of
change in accounting
principle (net of tax of $60) -- -- (94) (0.26)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Earnings $ 556 1.57% $ 485 1.36%
===================================================================================================================================
Earnings (Loss) Per Share:
Basic
Continuing operations $ 1.51 $ 2.18
Discontinued operations -- (0.72)
Cumulative effect of
change in accounting
principle (net of tax
of $0.15) -- (0.24)
------- -------
Net Earnings $ 1.51 $ 1.22
======= =======
Diluted
Continuing operations $ 1.51 $ 2.17
Discontinued operations -- (0.72)
Cumulative effect of
change in accounting
principle (net of tax
of $0.15) -- (0.23)
------- -------
Net Earnings $ 1.51 $ 1.22
======= =======
Weighted Average
Common Shares Outstanding:
Basic 368 397
Diluted 369 399
Percentages may not sum due to rounding differences.
ALBERTSONS, INC.
(Unaudited - In millions)
Condensed Consolidated Balance Sheet Data
January 29, 2004 January 30, 2003
- --------------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 289 $ 162
Accounts and notes receivable 683 647
Inventories 3,035 2,973
Assets held for sale 69 120
Other current assets 313 366
- --------------------------------------------------------------------------------
Total Current Assets 4,389 4,268
Land, buildings and equipment, net 9,145 9,029
Goodwill and intangibles, net 1,530 1,613
Other assets 300 301
- --------------------------------------------------------------------------------
Total Assets $15,364 $15,211
================================================================================
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 1,765 $ 2,009
Current portions of long-term debt
and capital lease obligations 520 119
Other current liabilities 1,370 1,320
- --------------------------------------------------------------------------------
Total Current Liabilities 3,655 3,448
Long-term debt 4,452 4,950
Capital lease obligations 352 307
Other long-term liabilities
and deferred credits 1,524 1,309
Stockholders' equity 5,381 5,197
- --------------------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $15,364 $15,211
================================================================================
Total Common Shares
Outstanding at End of Period 368 372
======= =======
Condensed Consolidated Cash Flow Data
52 Weeks Ended 52 Weeks Ended
January 29, 2004 January 30, 2003
- --------------------------------------------------------------------------------
Cash Flows From Operating Activities:
Net earnings $ 556 $ 485
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation and amortization 969 943
Net deferred income taxes and
other noncash charges 213 115
Discontinued operations noncash charges -- 365
Cumulative effect of change in
accounting principle -- 94
Changes in operating assets
and liabilities (193) 58
- --------------------------------------------------------------------------------
Net cash provided by
operating activities 1,545 2,060
- --------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Capital expenditures (1,094) (1,359)
Proceeds from disposal of land,
buildings and equipment 72 101
Proceeds from disposal of assets held
for sale 119 578
Other (23) 18
- --------------------------------------------------------------------------------
Net cash used in investing activities (926) (662)
- --------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Cash dividends paid (280) (306)
Payments on long-term borrowings (119) (143)
Stock purchases and retirements (108) (862)
Other 15 14
- --------------------------------------------------------------------------------
Net cash used in financing activities (492) (1,297)
- --------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents 127 101
Cash and Cash Equivalents
at Beginning of Period 162 61
- --------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 289 $ 162
================================================================================
SOURCE Albertsons Inc.
-0- 03/09/2004
/CONTACT: media, Albertsons Public Affairs, +1-208-395-6392, or analysts,
Nick Kormeluk, +1-208-395-6622, both of Albertsons, Inc./
/First Call Analyst: /
/FCMN Contact: /
(ABS)
CO: Albertsons Inc.
ST: Idaho
IN: REA SUP FOD
SU: ERN