Home » Safeway Pleased With 2Q Results
National Store News

Safeway Pleased With 2Q Results

safeway logo

Safeway Inc. President and CEO Robert Edwards says the company is pleased with its second quarter 2013 results, which it reported last week.

“We are pleased with the significant milestones we achieved this quarter. The substantial cash proceeds we expect to receive from the sale of our Canadian operations combined with the completion of the Blackhawk IPO will allow us to broadly enhance stakeholder value,” Edwards said.

Safeway announced in June that it had entered into an agreement to sell its Canadian operations through a sale of substantially all of the net assets of Canada Safeway Limited (CSL) to Sobeys Inc., a Canadian food retailer and wholly owned subsidiary of Empire Co. Ltd.

“At the same time,” Edwards said, “our continuing U.S. operations demonstrated strong year-over-year earnings growth in the second quarter, and we continue to gain share in our U.S. markets with a 20 basis-point improvement in the supermarket channel and a two basis-point improvement in the all outlet channel.”

Income from continuing operations was $58.1 million for the second quarter of 2013 and included increased legal reserves of $17.0 million related to multiple matters, Blackhawk expense of $5.7 million triggered by an IPO and a gain on the sale of investments of $8.5 million.

Excluding these items, income from continuing operations was $68.1 million in the second quarter of 2013 compared to $47.6 million in the second quarter of 2012.

Loss from discontinued operations, net of tax, was $49.3 million in the second quarter of 2013, including a tax charge of $106.7 million on CSL retained earnings. With the agreement to sell CSL in the second quarter of 2013, Safeway reports it must accrue taxes on retained earnings that had previously been considered indefinitely reinvested. This tax charge is included in the previously announced estimated net proceeds of C$4.0 billion from the sale of CSL.

Excluding this tax charge, income from discontinued operations, net of tax, would have been $57.4 million in the second quarter of 2013. This compares with income from discontinued operations, net of tax, in the second quarter of 2012 of $75.3 million, which consisted of $74.1 million from Canadian operations and $1.2 million from the sale of three Genuardi’s properties.

Net income for the second quarter of 2013 was $8.4 million. After adjusting for the items in continuing and discontinued operations, net income for the second quarter of 2013 was $125.1 million. This compares to net income of $122.7 million in the second quarter of 2012.

Sales and other revenue declined 1.6 percent to $8.7 billion in the second quarter of 2013 from $8.8 billion in the second quarter of 2012, primarily due to lower fuel sales in 2013 and the disposition of Genuardi’s stores in 2012, partly offset by an identical-store sales (excluding fuel) increase of 1.2 percent.

Gross profit increased 29 basis points to 26.23 percent of sales in the second quarter of 2013 compared to 25.94 percent of sales in the second quarter of 2012. Excluding the 32 basis-point impact from fuel sales, gross profit declined three basis points due primarily to shrink expense, investments in price and increased revenue from Blackhawk, partly offset by reduced advertising expense.

Operating and administrative expense increased 28 basis points to 24.65 percent of sales in the second quarter of 2013 from 24.37 percent of sales in the second quarter of 2012. Excluding the 49 basis-point impact of lower fuel sales, operating and administrative expense decreased 21 basis points, primarily due to lower property impairment charges and store occupancy expense, partly offset by $17.0 million of increased legal reserves and increased labor costs.

Operating profit margin increased two basis points to 1.59 percent in the second quarter of 2013 from 1.57 percent in the second quarter of 2012. Excluding fuel, operating profit increased 18 basis points.

 

Featured Photos

Featured Photo PLMA Annual Private Label Trade Show
Donald E. Stephens Convention Center
Chicago, Illinois
Share via
Copy link
Powered by Social Snap