BOISE, Idaho -- Albertson's here said sales and earnings reached record levels in the second quarter ended Aug. 3. Net income rose 13.4% for the 13-week quarter to $106.2 million and 27% for the half to $205.5 million. Sales increased 4.4% for the quarter to $3.1 billion and 5.2% for the half to $6.2 billion. Same-store sales declined 0.3% for the quarter and increased 0.1% for the half.
Excluding the cumulative effect of an accounting change for postemployment benefits recognized in last year's first quarter, net income rose 14.9% for the half. According to A. Craig Olson, senior vice president of finance and chief financial officer, "Although identical-store sales fell short of expectations, the company did experience improvement in identical-store sales in the latter part of the second quarter. "Tight controls on gross margin and on selling, general and administrative expenses contributed to the solid earnings results." Gross margins rose 38 basis points to 25.51%, compared with 25.13% a year ago, and selling, general and administrative expenses rose 2 basis points to 19.58%, compared with 19.56%. Chuck Cerankosky, a securities analyst with Hancock Institutional Equity Services, Cleveland, said Albertson's same-store sales, which were negative in the early part of the second quarter, were up 0.4% during the month of July and are up 1.8% in the early part of the third quarter. "Albertson's has been able to accelerate its same-store sales growth rate without having to trash margins by catering to customer constituencies at the neighborhood level," Cerankosky said. The company said it purchased and retired 1.4 million shares of common stock during the quarter, at a total cost of $40.1 million.