BOISE, Idaho -- Albertson's here said sales increased 7% to a record $2.9 billion in the first quarter ended May 5.
Same-store sales increased 3% in the quarter, which, according to securities analysts, ranks among the best same-store sales performances in the industry.
Albertson's net earnings also hit a record level in the 13-week period, rising 6.3% to $78.8 million.
Excluding a $6.4 million charge (3 cents per share) related to an accounting change for retirement benefits, Albertson's said net would have increased 14.9% to $85.2 million. Net in the year-ago period totaled $74.1 million.
In a statement, Albertson's said it was "pleased' with the same-store sales increase and it will continue its efforts to increase sales in existing stores and reduce expenses as a percentage of sales. Albertson's operates 678 stores in 19 states.
Operating and administrative expenses increased 10 basis points in the quarter to 19.47% of sales. This was offset by a 52 basis-point improvement in gross margins, which increased to 24.84% of sales.
Operating profit increased 16% to $156.1 million.
Jack Russo, a securities analyst at A.G. Edwards, St. Louis, said Albertson's first-quarter earnings were in line with expectations.
"Albertson's same-store sales number is fantastic," he said. "In a tough period for all operators, Albertson's is distinguishing itself right now from the rest of the group in terms of sales performance."
Albertson's is benefiting from the distribution side of its business, especially the general-merchandise and pharmaceutical warehouse in Ponca City, Okla., Russo said. A new distribution center in Phoenix also has "taken the strain off some of their other existing distribution centers," he said.
The profitability gains Albertson's is receiving from its improved distribution capabilities allow the chain to drive sales by lowering prices on the shelf, Russo said.
