Profits tumble for parent company of Shaw’s

BOISE, Idaho – Albertsons Inc., the No. 2 U.S. supermarket chain, plans to expand a cost-cutting program after 2004 earnings tumbled 20 percent, hurt by hurricanes in Florida, sluggish business in Southern California and Texas, and changes in lease accounting.

Income for the year ended Feb. 3 at Boise-based Albertsons slipped to $444 million, or $1.19 per share, from $556 million, or $1.51.

Sales rose 13.6 percent to $39.9 billion as the company benefited from purchases of Shaw’s in the northeastern United States and Bristol Farms in the Los Angeles area.

The company, which has reduced costs since 2001 by more than $1 billion, plans to save another $250 million by the end of its 2006 fiscal year. It didn’t give details of how it would reduce expenses.

In 2004, Albertsons was forced to intensify investments in its southern California and Texas markets because business was more difficult than executives had anticipated. The fourth quarter also included a noncash expense of $8 million related to a change in lease accounting, amid pressure from the U.S. Securities and Exchange Commission regulators for companies to correct such figures.

“We were not pleased with the performance we turned in during the fourth quarter,” said Chief Executive Officer Larry Johnson in a statement on the company’s Web site. “We missed our earnings targets and that is unacceptable.”

Albertsons missed targets for earnings at continuing businesses that it revised less than a month ago.

On Feb. 25, it slashed its forecast by about 8 percent to between $1.29 and $1.31 per share.

Today, it reported just $1.28 per share at continuing businesses.

Fourth-quarter earnings advanced 49 percent to $194 million as the Shaw’s and Bristol Farms businesses added to profits and the company had an extra week compared to the year-earlier period.

The company forecast that fiscal 2005 earnings from continuing operations will be between $1.33 and $1.43 per diluted share, as sales at existing stores rise. The forecast includes a four cents per share cost of expensing stock options.

Comparable and identical store sales are expected to be “positive” for the full year, Albertsons said.

Albertsons’ shares fell 90 cents, or 4.3 percent, to close at $19.97 in Tuesday trading on the New York Stock Exchange, below its previous 52-week closing low of $20.40.