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Albertsons Posts Big Profit Jump

Net income nearly triples, reflecting a supermarket acquisition and recovering sales in Southern California.

June 08, 2005|From Times Staff and Wire Reports

Grocer Albertsons Inc. said fiscal first-quarter profit almost tripled, thanks to rising sales in Southern California and a New England supermarket acquisition.

Net income at the Boise, Idaho-based company climbed to $100 million, or 27 cents a share, from $36 million, or 10 cents, a year earlier.

Analysts surveyed by Thomson First Call had expected profit of 26 cents a share.

Sales in the quarter ended May 5 rose 16% to $9.9 billion.

David Parker, vice president of investor relations, said Albertsons continued to recover financially from the 4 1/2 -month strike and lockout of 59,000 supermarket workers in Southern and Central California. The company did not offer specifics.

The impasse ended Feb. 29, 2004, when members of the United Food and Commercial Workers union ratified a contract with Albertsons; Safeway Inc., owner of Vons and Pavilions; and Kroger Co., the parent of Ralphs.

Parker declined to comment on the effect of a federal judge's ruling last month that said California Atty. Gen. Bill Lockyer could proceed with an antitrust lawsuit against the three chains for forming a $150-million mutual-aid agreement during the strike and lockout.

The pool of money was used to balance losses and profits when one chain was picketed more heavily, driving business to the other companies.

Analysts credited most of the quarterly gains at Albertsons to last year's $2.48-billion acquisition of the 200 stores in the Shaw's chain.

Albertsons, the No. 2 U.S. grocer, operates 2,500 stores in 37 states. The company said sales at stores open at least a year, a key measure of retail growth, increased 1.8%.

Jason D. Whitmer, a food retail analyst with FTN Midwest Research in Cleveland, said the company's underlying sales, with or without the Southern California stores, were still lagging behind those of their primary competitors.

"They've done a great job on the cost side of things, but what needs to improve from here is sales, sales, sales," he said.

Albertsons reaffirmed its guidance for fiscal 2005 earnings from continuing operations of $1.37 to $1.47 a share. Analysts, on average, are predicting 2005 earnings of $1.38 a share.

Shares of Albertsons dropped 5 cents to $21.45.

Associated Press was used in compiling this report.

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