Albertsons Misses Q2 Mark

The locally based supermarket chain, which recently put itself up for sale, said stiff competition from discounters such as Wal-Mart hurt profits as the company tried to battle the competition by slashing prices, which cut into sales. In response to that competition, the grocery giant said it would ramp up efforts to exit weak markets and cash in on the strong real estate market by selling off its underperforming assets.

"We are now at the point in our turnaround where we are clarifying our end game--preparing to exit even more underperforming markets in order to monetize their embedded real estate and business value for shareowners and driving even harder for operational excellence," said Larry Johnston, Albertsons' chairman, chief executive officer and president. "We don't plan to slow down or take any time off."

The grocery chain showed a slight increase in net profits of $107 million, or 29 cents a share, during the second quarter, just $3 million more than the $104 million or 28 cents a share, it posted during the same period a year earlier. Total sales for the second quarter rose slightly to 10.2 billion but identical store sales dropped by 0.1%.

Excluding discontinued operations, earnings fell to 30 cents per share from 34 cents, during that same time frame. Analysts had expected the grocery chain to turn a quarterly profit of 34 cents.

The food retailer, which operates 2,300 stores in 31 states under its flagship name and the Acme, Jewel-Osco, Osco Drug, Savon and Shaws names, said it was aggressively moving to unload its underperforming assets and was expecting to sell off more than 60% of its 120 million sf of company owned property as part of its turnaround strategy implemented four years earlier. The sales would generate profit for shareholders and free the company to focus on its core grocery and drugstore business, Albertsons said.

The company also maintained its full-year profit forecast of $1.37 to $1.47 per share from continuing operations, and added that it was poised to meet its goal of cutting costs by $1.25 billion by the end of the next fiscal year.