BOISE, Idaho -- Albertsons here said last week it will cut capital spending by $300 million to a level between $1 billion and $1.1 billion.
remodeled store construction and productivity improvements from technology investments.
Net income for the 13-week second quarter ending Aug. 4 rose 2.9% to $107 million and 47.9% to $207 million for the half, while sales rose 0.2% to $10.2 billion for the quarter and 7.5% to $20.2 billion for the half. Comparable-store sales were flat for the quarter, with fuel impacting comps by 30 basis points; the company did not release comps for the year-to-date.
Albertsons said sales got a lift from a continuing recovery in Southern California from the 141-day labor dispute that ended in February 2004; however, it said that lift was partially offset by competitive pressures in markets such as Dallas/Fort Worth. "Competition in other markets was also strong as we experienced heavy promotional activity by many competitors throughout the quarter," Felicia Thornton, executive vice president and chief financial officer, said during a conference call with analysts.
"Clearly we could have invested more heavily to drive sales this quarter," Larry Johnston, chairman, president and chief executive officer, said during the call. "However, we remain disciplined in our approach to investing for sustained top-line growth vs. renting short-term sales gains."
Gross margins for the quarter declined 21 basis points to 28.04%, which Johnston said he attributed to price investments through the chain's Check the Price program -- an effort to establish "everyday fair pricing" on products consumers buy most often, he noted.
Albertsons reaffirmed previous guidance for the fiscal year of earnings of $1.37 to $1.47 per share and for positive comps and ID sales.
Also during conference call, Johnston said:
- The pilot test of radio frequency identification (RFID) will be expanded to the chain's Acme division, with 15 stores scheduled to be added this year and the remainder to be added in 2006.
- Albertsons has opened three more Super Saver locations -- two in Texas and one in Louisiana -- to bring the total of extreme-price stores to 27.
- Albertsons plans to add health centers staffed by nurse practitioners at six Osco drug stores in the Kansas City marketplace.
- The company has completed the rollout of Office Depot sections to all 2,500 of its stores.
2ND QUARTER RESULTS
Qtr Ended: 8/4/05; 7/29/04
Sales; $10.19 billion; $10.17 billion
Net Income: $107 million; $104 million
Inc/Share: 29 cents; 28 cents
26 Weeks: 2005; 2004
Sales: $20.2 billion; $18.8 billion
Comp-store: Not available
Net Income: $207 million; $140 million
Inc/Share: 56 cents; 38 cents
Comparisons exclude the chain's 11 Bristol Farms stores, which it acquired last September and which will not be included in comps until the fourth quarter.