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SAFEWAY ANNOUNCES THIRD QUARTER 1992 EARNINGS

 SAFEWAY ANNOUNCES THIRD QUARTER 1992 EARNINGS
 OAKLAND, Calif., Sept. 29 /PRNewswire/ -- Safeway Inc. (NYSE: SWY)


today reported net income for the third quarter ended Sept. 5, 1992 of $20.0 million ($0.17 per share). Net income for the third quarter of 1991 was $36.1 million, excluding the effect of a $12.7 million extraordinary loss related to the early retirement of debt and a one- time, after-tax gain of $16.9 million related to the gain on a common stock offering by an unconsolidated affiliate. Safeway previously announced that it expected net income for the third quarter of 1992 to about one-half of 1991 third quarter net income before 1991's one-time gains and extraordinary items.
 Sales were $3.5 billion in the third quarter of 1992, 2.3 percent less than the third quarter of 1991. Sales for the first 36 weeks of 1992 were 1.5 percent less than the same period of 1991. Same-store sales declined 3.5 percent in the third quarter and 2.6 percent in the first 36 weeks of 1992. Throughout the year a weak economy, lack of food price inflation and increased competition in certain markets have reduced sales growth at Safeway and throughout the grocery industry. In addition, a decline in the currency exchange rate used to translate sales in Canada into U.S. dollars reduced sales somewhat in 1992 compared to 1991.
 Gross profit was 27.3 percent of sales in the third quarter of 1992 compared to 27.1 percent in the third quarter of 1991. Gross profit margins in the third quarter reflect ongoing benefits from additional store specialty departments and investment in inventory purchasing systems, offset by an increased focus on competitive pricing and startup costs at Safeway's new distribution center in Tracy, Calif. LIFO expense was $2.6 million in both the third of 1992 and 1991.
 Operating and administrative expense was $843.4 million in the third quarter of 1992, only 2.8 percent greater than the third quarter of 1991. Safeway has largely contained operating and administrative expenses despite scheduled wage rate increases and growing fixed costs from its capital expenditure program. Lower sales and a modest increase in expenses combined to raise operating and administrative expenses to $24.4 percent of sales in the third quarter of 1992 compared to 23.2 percent in the third quarter of 1991.
 Operating profit declined to $98.8 million in the third quarter of 1992 from $136.9 million in the third quarter of 1991. The comparison between quarters reflects the strong results achieved in the third quarter of 1991 before low inflation and recessionary sales trends had fully emerged in many of Safeway's markets.
 "Results for the quarter were impacted by a weak economy and virtually flat food price inflation," said Peter A. MacGowan, chairman, president and chief executive officer. "Safeway cannot control the economy or inflation but we can and will continue to control costs, focus on competitive pricing, and build and remodel stores to provide for future growth."
 Operating cash flow (FIFO) earnings before income taxes, interest expense, depreciation, amortization and income from unconsolidated affiliates) was $178.2 million, or 5.16 percent of sales, in the third quarter of 1992 compared to $212.4 million, or 6.0 percent of sales, in the third quarter of 1991. Lower interest expense improved the ratio of operating cash flow to interest expense to 2.80 in the third quarter of 1992 from 2.58 in the third quarter of 1991. This ratio is an important measure of Safeway's ability to service debt.
 Interest expense declined to $63.7 million in the third quarter of 1992 from $82.2 million in the third quarter of 1991 due to the refinancing of $1.6 billion of high interest rate debt from mid-1991 through the first quarter of 1992 and lower short-term interest rates.
 Equity in earnings of unconsolidated affiliates, recorded on a one- quarter delay basis, was $5.9 million in the third quarter of 1992 compared to $10.9 million in the third quarter of 1991. Increased income from Safeway's 49 percent equity investment in Casa Ley, a retailer in western Mexico, was offset by reduced income from Safeway's 35 percent equity investment in Vons, the leading supermarket chain in southern California. Vons increased operating income slightly in its second quarter of 1992 over the same period in 1991. However, Vons incurred a $12.2 million extraordinary loss on early debt retirement in its second quarter of 1992, compared to $9.5 million extraordinary gain on the utilization of tax carryforwards in the same period of 1991.
 Safeway Inc. is one of the world's largest food retailers, operating more than 1,100 stores in the United States and Canada. The company's stock is traded on the New York Stock exchange under the symbol SWY.
 SAFEWAY INC. AND SUBSIDIARIES
 Operating Results
 (Unaudited, in millions, except per share amounts)
 Periods 12 Weeks 36 Weeks
 Ended 9/5/92 9/7/91 9/5/92 9/7/91
 Sales $ 3,455.5 $ 3,537.2 $ 10,302.1 $ 10,457.4
 Gross profit 942.2 957.6 2,822.5 2,834.8
 Operating and
 admin. expenses (843.4) (820.7) (2,500.8) (2,435.4)
 Operating profit 98.8 136.9 321.7 399.4
 Interest expense (63.7) (82.2) (201.5) (253.6)
 Equity in earns. of
 unconsolidated
 affiliates 5.9 10.9 24.1 32.8
 Gain on common stock
 offering by
 unconsolidated
 affiliate -- 27.4 -- 27.4
 Other income, net 2.8 5.2 6.6 11.9
 Inc. before inc. taxes
 extraord. loss 43.8 98.2 150.9 217.9
 Inc. tax exp. (23.8) (45.2) (74.7) (102.6)
 Inc. before
 extraord. loss 20.0 53.0 76.2 115.3
 Extraord. loss related
 to early retirement
 of debt, net of inc.
 tax benefit of
 $17.1 and $7.9 -- (12.7) (27.8) (12.7)
 Net inc. 20.0 40.3 48.4 102.6
 Primary and fully
 diluted earns. per
 common share and
 common share equiv.:
 Inc. before
 extraord. loss $ 0.17 $ 0.44 $ 0.64 $ 1.02
 Extraord. loss -- (0.11) (0.23) (0.11)
 Net inc. 0.17 0.33 0.41 0.91
 Weighted avg. common
 shares and common
 share equiv.
 (fully diluted) 117.9 120.6 119.3 113.0
 Operating cash
 flow(A) 178.2 212.4 557.8 627.4
 (as a percent
 of sales) 5.16 6.00 5.41 6.00
 (as a multiple
 of int. exp.) 2.80 2.58 2.77 2.47
 Capital expenditures
 including leases 116.7 146.7 321.6 351.9
 (A) FIFO earnings before income taxes, interest expense, depreciation, amortization, income from unconsolidated affiliates and extraordinary loss.
 -0- 9/29/92
 /CONTACT: Melissa C. Plaisance, director-investor relations of Safeway, 510-891-3136, or fax 510-891-3126/
 (SWY) CO: Safeway, Inc. ST: California IN: REA SU: ERN


TM-DG -- SF002 -- 4242 09/29/92 09:16 EDT
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