PLEASANTON, CA -- (Marketwire) -- 02/21/13 -- Safeway Inc. (NYSE: SWY)
Results From Operations
Safeway Inc. today reported net earnings from continuing operations of $1.06 per diluted share for the fourth quarter which ended December 29, 2012. This includes a $0.12 per diluted share benefit from legal settlements. When you exclude this benefit, earnings per diluted share is $0.94. This represents a 58% improvement in earnings per diluted share over last year when the settlements are included and a 40% improvement when the settlements are excluded. Other highlights of the quarter include:
•Our third consecutive quarter of U.S. unit market share gains with a 38 basis-point improvement in the supermarket channel and a 10 basis-point improvement across all outlets.
•An identical-store sales increase (excluding fuel) of 0.8%, which was negatively impacted by a calendar shift* of 0.3% and a generic drug impact of 0.7%.
•A unit volume increase of 0.3% in the U.S., when the market supermarket channel declined 2.1% and all outlets declined 0.6% in our U.S. markets.
•Operating profit margin improvement of 39 basis points including the gain from legal settlements and 10 basis points when you exclude the settlements, fuel sales and fuel partner discounts.
"We are pleased with our results for the quarter," said Steve Burd, Safeway's Chairman and Chief Executive Officer. "While the calendar shift of New Year's Eve and the shift to generic drugs had a significant drag on reported ID sales, our just for U and fuel loyalty programs are driving market share gains and profits."
Sales and Other Revenue
Sales and other revenue increased 1.2% to $13.8 billion in the fourth quarter of 2012. This increase was largely due to higher gift and prepaid card sales and a 0.8% increase in identical-store sales, excluding fuel, partly offset by the disposition of the Genuardi's stores.
* Safeway's fiscal year 2011 ended on December 31, 2011 and therefore captured New Year's holiday sales. Safeway's fiscal year 2012 ended on December 29, 2012 and therefore did not capture all New Year's holiday sales.
Gross profit declined 21 basis points to 26.50% of sales in the fourth quarter of 2012 compared to 26.71% of sales in the fourth quarter of 2011. Excluding the 10 basis-point impact from fuel sales and fuel partner discounts, gross profit declined 11 basis points due primarily to investments in price, partially offset by the gross margin benefit from the shift to generic drugs.
Operating and Administrative Expense
Operating and administrative expense decreased 60 basis points to 23.24% of sales in the fourth quarter of 2012 from 23.84% of sales in the fourth quarter of 2011. Excluding the 38 basis-point impact of the $46.5 million gain from legal settlements and the one basis-point impact from fuel sales, operating and administrative expense decreased 21 basis points. This decrease was primarily the result of lower store labor costs and lower store occupancy costs, partly offset by lower property gains.
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