Safeway’s Q1 in line with company’s expectations
PLEASANTON, Calif. — Net income for Safeway dropped due to a tax charge and the retailer’s decision to repatriate $1.1 billion from its wholly owned Canadian subsidiary, although the company noted revenue rose nearly 5%.
Net income for the first quarter ended March 26 dropped to $25.1 million, or 7 cents per diluted share, compared with $96 million, or 25 cents per diluted share, in first quarter 2010. Excluding the tax charge, Safeway said first-quarter net income was $105.3 million, or 29 cents per diluted share.
Total sales for the retailer increased 4.8% to $9.8 billion in first quarter 2011, compared with $9.3 billion in first quarter 2010. The retailer said that the increase was the result of higher fuel sales, a 0.4% increase in identical-store sales, excluding fuel, and a higher Canadian exchange rate, partly offset by reduced sales due to closed stores.
"Our first-quarter results are in line with our expectations, and we are pleased with our improving sales trends," said Steve Burd, chairman, president and CEO. "Identical-store sales, excluding fuel, improved for the fifth consecutive quarter and are now positive. We are successfully passing cost inflation along at retail while making appropriate price adjustments to remain competitive."
Safeway is reaffirming guidance for the year of $1.45 to $1.65 earnings per diluted share (including the estimated 1 cents per diluted share negative impact from the Canadian dividend).
Winn-Dixie sells off last of noncore operations
JACKSONVILLE, Fla. — Winn-Dixie Stores announced that, with the sale of its Deep South beverage manufacturing facility, it has completed its program to sell all noncore manufacturing operations.
Polar Beverages of Worcester, Mass., will own the Fitzgerald, Ga.-based facility effective April 29.
“In 2005, Winn-Dixie announced a strategy that would allow the company to focus on its core business: operating grocery stores that provide our guests with superior service, great selection and variety. Part of this mission included Winn-Dixie exiting our manufacturing operations,” said Bennett Nussbaum, Winn-Dixie’s SVP and CFO.
Polar will continue operation of this facility, and Winn-Dixie has negotiated a five-year agreement with Polar Beverages as the exclusive supplier of its market-leading Chek brand carbonated soft drinks.
Polar said it intends to operate the facility as it is today, with minimal change to existing employees or their wages and benefits. Upon completion of the sale, employees of this facility will become employees of Polar Beverages.
Shoppers Drug Mart reports Q1 results
TORONTO — Shoppers Drug Mart posted a 2.7% boost in first-quarter sales, driven by strong front-store sales gains that benefited from marketing campaigns, promotions and market share gains of the company’s core health, beauty and convenience categories.
Front-end same-store sales rose 4.4% during the quarter ended March 26. Sales at the front end were C$1.197 billion ($1.26 billion), up 6% compared with the year-ago period.
Pharmacy same-store sales decreased 0.4%. Prescription sales were C$1.15 billion ($1.21 billion), also a decrease of 0.4%, compared with the year-ago period. Continued growth in the number of prescriptions filled was offset by a reduction in average prescription value, the company stated. The decrease in average prescription value can be largely attributed to a reduction in generic prescription reimbursement rates, the result of recently implemented drug system reform initiatives in certain jurisdictions of Canada, combined with increasing generic prescription utilization rates.
First-quarter sales were C$2.35 billion ($2.48 billion), up 2.7%, compared with the year-ago period. Net earnings were C$118 million ($124 million), or 54 Canadian cents per share, compared with C$114 million (US$120 million), or 52 Canadian cents per share, last year.
"We are pleased with our performance in the first quarter of 2011. This is a particularly solid result considering that we are in the midst of working through a difficult period of transition as we adjust our business and service model in response to government reform initiatives and the resultant funding and reimbursement pressures on our pharmacy business," stated David Williams, director and interim president and CEO.
"Together with our associate owners and their teams at store level, we remain well-positioned to meet the challenges and capitalize on the opportunities ahead of us without ever compromising on our commitment to excellence in patient care and customer service," Williams added.
The company also announced several changes to its board of directors, including the appointment of a new board chair. Effective May 1, Holger Kluge will succeed Williams as the nonexecutive chairman of the board. Kluge, an independent director who joined the board in February 2006, has served as chair of the audit committee since May 2006.
Williams, an independent director who joined the board in September 2003 and has served as the nonexecutive chair since February 2007, will continue to serve as a director and has been appointed to the Nominating and Governance Committee.