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Another banner year.

Widely acclaimed as one of the best-managed chains in the industry, Albertson's is on its way to record sales and earnings in fiscal 1984. But thaths just business as usual for the Boise-based chain, which has racked up steady increases for many years, largely due to the success of its superstores and combination units.

During the six-month period that ended Aug. 2 1984, Albertson's rang up $2.3 billion in sales, 11.4% more than the comparable period in 1983. Earnings fared even better, skyrocketing 20.3%, to $37.2 million.

Albertson's net earnings increase this year follows an impressive 1983. Earnings for the fiscal year the ended Feb. 2. 1984, came in at $70.3 million, a 20% jump over fiscal 1982. Sales for the 52-week 1983 fiscal year totaled $4.28 billion, an increase of 9% over fiscal 1982, which was a 53-week fiscal year.

Albertson's long-term success has resulted from its skill at operating four distinct formats that appeal to the one-sop shopping needs of consumers. At the end of fiscal 1983, the company operated 432 stores of which 255 are conventional supers, 69 are superstores, 89 are combination food-drug units, and 19 are markets called "The Grocery Warehouse."

Over the past decade, the chain has concentrated its energy, and its capital spending, on the combinaton units and superstores. The chain expanded from 48 combination stores at the beginning of fiscal 1979 to 89 such units at the close of fiscal 1983.

The chain's superstores, which are smaller versions of the combination food-drug units and require less real estate and fit better into many operating areas, have been receiving even more attention. By the end of fiscal 1983, Albertson's operated almost four times more superstores as it did five years ago. The company added 23 superstores in fiscal 1983.

The road that Albertson's has chosen to follow is illustrated by the changes in square footage percentage devoted to each format during the past five years. In fiscal 1979, conventionals accounted for 64.7% of square footage; combination stores, 26.7%; superstores, 7.5%; and grocery warehouses, 1.1%. As of February 2, 1984, the percentages were: conventionals, 44.1%; combination units, 32.1%; superstores, 19.3%; and grocery warehouses, 4.5%.

Albertson's success with these formats is reflected in its enviable profit margin. On a comparable FIFO basis, the profit margin has increased from 1.56% five years ago, to 1.65% at year-end 1982, to 1.74% for the fiscal year ended February 2, 1984. The profit margin on a LIFO basis was 1.64% for fiscal 1983.

In fiscal 1984, the chain plans to open 30 superstores, 11 combination units and one conventional market. All of the proposed stores will be in states already served by Albertson's, Chairman Warren E. McCain says.

The company's biggest push in the near future will be in Texas, where eight stores are to be opened in 1984. The chain will be concentrating on the Dallas-Fort Worth market, with seven combination stores slated to open there starting at the end of 1984. Total capital expenditurres for fiscal 1984 are projected at $131 million, up 42.4% over fiscal 1983. Albertson's plans 22 remodelings this year.

The future looks promising. By opening 40 to 50 stores a year, the firm expects to add about 40% in squae footage annually, with most of the extra feet in more profitable formats. "We are excited about our five-year plan." MeCain says. "Sales will grow from $4.28 billion last year to over $9 billion. Earnings should grow proportionately. We plan to open 242 stores over the next five years. The future is trly exciting."
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Title Annotation:Albertsons
Publication:Progressive Grocer
Date:Oct 1, 1984
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