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  • 标题:California labor strike reduces earnings of Kroger, Albertsons
  • 作者:John Nolan Associated Press
  • 期刊名称:Deseret News (Salt Lake City)
  • 印刷版ISSN:0745-4724
  • 出版年度:2004
  • 卷号:Mar 10, 2004
  • 出版社:Deseret News Publishing Company

California labor strike reduces earnings of Kroger, Albertsons

John Nolan Associated Press

CINCINNATI -- Two of the nation's largest grocery chains, Kroger Co. and Albertsons Inc., reported quarterly earnings on Tuesday that were dramatically reduced because of an extended labor strike and lockouts in Southern California.

Albertsons said its fourth-quarter income fell 37 percent, while larger rival Kroger, which operates Smith's and Fred Meyer stores, reported a $337.4 million loss for the period, which included a large charge.

For the three months ending Jan. 31, Kroger reported a loss of $337.4 million, or 45 cents per share, compared with earnings of $381 million, or 50 cents per share, a year earlier.

Albertsons, based in Boise, said it earned $130 million, or 35 cents per share, compared with profits of $205 million, or 54 cents a share, in the previous year.

Both companies attributed their declines in part to a 4 1/2-month strike and lockout in California at Albertsons and Kroger's Ralphs stores.

Besides the California dispute, about 3,300 union members from 44 Kroger stores in Kentucky, Ohio and West Virginia also walked for nearly two months over medical benefits. The two strikes reduced Cincinnati-based Kroger's earnings by $156.4 million after taxes, the company said.

Analysts surveyed by Thomson First Call had predicted Kroger earnings of 22 cents per share.

David B. Dillon, Kroger's chief executive, said the company expects lower earnings this year than in 2003, but he refused to offer specifics on a conference call with analysts.

"They were clear . . . that their earnings are going to be down even if you factor out the strike," said Andrew Wolf, an analyst in New York with BB&T Capital Markets.

The company is uncertain of the total costs to settle the strike, rebuild Ralphs' business and boost companywide sales, Dillon said.

The company will focus on reducing its costs for labor, administration, warehousing and other operations, Dillon said. He would not say how or where the reductions will be made.

Supermarket operators also have been forced to intensify cost cuts to remain competitive against big-box retailers that sell groceries, including nonunion Wal-Mart Stores Inc., a huge and growing competitor in the grocery market.

Albertsons chief executive Larry Johnston said the California strike reduced fourth quarter earnings by $90 million, or 24 cents a share. The quarter's earnings of 45 cents per share exceeded analysts' estimates of 20 cents.

For the year, Albertsons reported net income of $556 million, or $1.51 a share, on sales of $35.44 billion. In 2002, Albertsons earned $485 million, or $1.22 a share, on revenue of $35.63 billion.

Kroger also cited other expenses that collectively reduced after- tax earnings by $663.1 million, or 89 cents per diluted share. Those were a $444.2 million charge for its Smith's store division in seven Western states and a $75 million write-down for 74 underperforming stores.

Still, Kroger's sales for the latest quarter increased 4.5 percent to $13 billion, including stores affected by the strikes.

The California contract that union workers approved to end the strike covers 70,000 workers, a majority of them employed by Albertsons, Kroger and Safeway Inc., which operates Vons and Pavilions. The contract offered no raises, requires employees to pay for health benefits for the first time and includes two one-time bonuses for hours already worked. Union leaders said they wanted to protect affordable health care, pensions and job security.

Albertsons said it would offer discounts to shoppers to draw them back into its southern California stores, along with movie tickets. Kroger didn't say how it would respond to that, but competition likely will dictate a response, Wolf said.

"Generally, if one guy does something, you're going to have to do something, or your business walks next door," Wolf said.

Kroger shares were down 35 cents to close at $18.56 Tuesday on the New York Stock Exchange. Albertsons' shares fell 21 cents to close at $23.91.

For fiscal 2003, Kroger earnings were $314.6 million, or 42 cents per share, compared with $1.2 billion, or $1.52 per share, a year earlier. Sales increased 4 percent to $53.8 billion. The 2003 results included charges of $801.3 million after taxes, or $1.06 per share, for expenses including the strikes, asset write-down and resolving disputes involving energy supply arrangements.

Kroger operates 2,532 supermarkets and multi-department stores in 32 states under various names. Its business also includes 802 convenience stores, 440 jewelry stores, 466 supermarket fuel centers and 41 food processing plants.

Albertsons employs 200,000 workers at more than 2,300 stores and other facilities in 31 states.

Contributing: Bob Fick

Copyright C 2004 Deseret News Publishing Co.
Provided by ProQuest Information and Learning Company. All rights Reserved.

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