Albertsons Expands, Cuts Costs

The company, one of the world's largest supermarket and drug chains, reported net earnings rose 18% to $107 million, or 29 cents per share, compared with $91 million, or $0.25 per share, for the same period last year. Sales rose 15% to $10 billion for the quarter, compared with $8.7 billion in last year's third quarter.

Albertsons attributed the sales boost primarily to its acquisition of the New England-based Shaw's supermarket chain and its purchase of Southern California-based Bristol Farms. The Boise-based company also cited an increase in Southern California sales following the labor dispute that depressed sales in last year's third quarter.

Larry Johnston, the chairman, CEO and president of Albertsons, described the third period as "another tough quarter for food and drug retailers" saying that "consumer confidence declined in each month of the quarter and fuel prices continued to put pressure on discretionary income." As part of the continuing expansion of its store base, the company added 20 stores and remodeled 70 during the third quarter, ending the period with 2,507 stores.

Besides expansion of its existing stores, the Albertson's strategy in these tough times includes diversification into specialty and gourmet groceries via its Bristol Farms acquisition, the rollout of its new Extreme Inc. stores and heavy promotional activities and emphasis on its own private label brands. The chain opened its first seven stores under the Extreme Inc. subsidiary during the quarter, while its private label efforts include the introduction of the Essensia premium line and Equaline, a new brand for health and beauty care products, and its promotional activities include a national "Check the Price" program to lower everyday prices.

Along with its expansion, Albertsons has continued a cost savings program that was initiated in mid-2001. Through the third quarter of 2004, the program had saved more than $900 million toward a cost-savings goal of $1 billion by year end 2005, according to this latest quarterly report. Under the cost savings program, each main category of expense, including labor, is monitored by a member of executive management.

Albertson's divisions and subsidiaries operate in 37 states across the US under the names Albertsons, Acme, Shaw's, Jewel-Osco, Sav-on Drugs, Osco Drug, Star Markets, Super Saver and Bristol Farms.