Wal-Mart Reports Financial Results for Fiscal Year & Fourth Quarter
Safeway Inc. Announces First Quarter 2009 Earnings Board Approves 21% Increase in Quarterly Dividend PLEASANTON, Calif.--(BUSINESS WIRE)--Apr. 30, 2009-- Safeway Inc. (NYSE:SWY):
Results From Operations
Safeway Inc. today reported net income of $144.2 million ($0.34 per diluted share) for the first quarter of 2009 compared to net income of $193.4 million ($0.44 per diluted share) for the first quarter of 2008.
“As anticipated, our earnings this quarter were negatively impacted by the shift in holiday sales, a decline in the Canadian currency exchange rate, a decline in fuel margins and higher pension expense,” said Steve Burd, Chairman, President and CEO.
“We continued to make price investments to address the needs of our customers in this difficult economic environment. As a result, we saw an increase in the number of sales transactions and an improving trend in market share for the quarter,” added Burd. “Because we are confident in the underlying strength of the business and our cash flow, we are increasing our quarterly dividend by 21% and repurchasing company stock.”
Sales and Other Revenue
Total sales declined 7.6% to $9.2 billion in the first quarter of 2009 compared to $10.0 billion in the first quarter of 2008. This decline was the result of lower fuel sales (which was due primarily to lower fuel prices), a decline in the Canadian exchange rate and a shift in holiday sales.
Identical-store sales for the quarter, excluding fuel, declined 0.7%. After excluding the weeks affected by the shift in Easter holiday sales, identical-store sales, excluding fuel, increased to an estimated 0.2%.
Gross profit declined seven basis points to 28.72% of sales in the first quarter of 2009 compared to 28.79% of sales in the first quarter of 2008. Excluding the 79 basis point impact from fuel sales, gross profit declined 86 basis points. This decline was primarily the result of investments in everyday prices, as well as an elevated level of promotional spending. Investments in everyday prices will continue, while promotional spending is expected to return to normal levels.
Operating and Administrative Expense
Operating and administrative expense declined approximately $100 million to $2.4 billion in the first quarter of 2009 from $2.5 billion in the first quarter of 2008. However, due to lower sales in 2009, operating and administrative expense increased 90 basis points to 25.67% of sales in the first quarter of 2009 from 24.77% of sales in the first quarter of 2008. Excluding the 74 basis point impact of lower fuel sales in the first quarter of 2009, operating and administrative expense increased 16 basis points. This increase was primarily the result of decreased sales leverage (partially due to the shift in holiday sales), increased occupancy costs as a percentage of sales and increased pension expense, partly offset by reduced labor costs.
Interest expense declined to $78.2 million in the first quarter of 2009 from $84.5 million in the first quarter of 2008 due to a combination of lower average borrowings and lower interest rates.