US: Safeway ends FY with "pleasing" Q4
US retailer Safeway Inc ended its financial year with an acceleration in underlying sales growth in the final quarter and earnings per share that beat analyst forecasts.
Safeway reported an 0.8% rise in identical-store sales, excluding fuel, for the fourth quarter, which ended on 29 December. For the year as a whole, identical-store sales without fuel were up 0.5%.
The retailer said it had gained market share in its core supermarket channel and across all its outlets. Volumes also bucked a downward trend in the market, up 0.3%.
Underlying earnings per share for the quarter were $0.94, compared to a consensus forecast on Wall Street of $0.77. Net income and operating profit rose in the quarter higher sales offset investment in price. Safeway's top line increased 1.2% to $13.77bn.
Over the year, net income increased, although operating profit fell. The annual sales increase was not enough to offset the spending Safeway made in price.
|Safeway Inc. Announces Fourth Quarter 2012 Results|
|Safeway Reports Strong Results
PLEASANTON, CA -- (MARKETWIRE) -- 02/21/13 -- Safeway Inc. (NYSE: SWY)
Results From Operations
"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
* 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.
Operating and Administrative Expense
Sales increased 1.3% to $44.2 billion in 2012 from $43.6 billion in 2011. This increase was primarily due to increased fuel sales, higher gift and prepaid card sales and an identical-store sales increase (excluding fuel) of 0.5%, partially offset by the disposition of the Genuardi's stores.
Gross profit margin declined 52 basis points to 26.51% in 2012 from 27.03% in 2011. Excluding the 30 basis-point impact from fuel sales, gross profit declined 22 basis points, primarily due to investments in price and cost incurred to launch our just for U loyalty program, partly offset by lower LIFO expense.
Operating and administrative expense decreased 42 basis points to 24.01% in 2012 from 24.43% in 2011. Excluding the 16 basis-point impact from fuel sales, operating and administrative expense decreased 26 basis points primarily because of the gain from legal settlements and lower labor expense.
Income tax expense decreased to 31.7% of pre-tax income in 2012 from 41.3% in 2011 primarily due to a$98.9 million tax charge in 2011 resulting from the repatriation of $1.1 billion of earnings from Safeway'swholly-owned Canadian subsidiary.
Net cash flow used by investing activities decreased to $572.0 million in 2012 from $1,014.5 million in 2011 primarily due to increased proceeds from the sale of properties, net cash proceeds from discontinued operations and lower capital expenditures in 2012.
Net cash flow used by financing activities increased to $1,373.8 million in 2012 from $1,077.3 million in 2011 due primarily to lower net additions to debt in 2012, partially offset by a lower level of stock repurchases in 2012.
Share repurchases in 2012, net of incremental interest expense, increased diluted earnings per share by$0.17 in the fourth quarter of 2012 and $0.32 for the year 2012.
Original source: Safeway Inc
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