Pleasanton, California-based Safeway, one of the largest food and drug retailers in the US, expects to report diluted earnings per share of about US$0.71 – US$0.73 for the Q2 ending 15 June 2002, before one-time charges.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
This is 5% – 8% below the existing First Call consensus estimate of US$0.77 per share for the Q2 of 2002. In addition, the company is revising its FY 2002 guidance to US$2.86 – US$2.90 per share before one-time charges, which is 8% – 9% below the current First Call consensus estimate of US$3.15 for 2002.
The company said that the sales and income shortfall is a result of the continued softness in the economy, an increase in competitive activity, an overly aggressive shrink effort and disruptions associated with the centralisation of buying and merchandising.
“While we are disappointed with our results, we firmly believe we can reverse current trends,” said Steve Burd, chairman, president and CEO. “We have just completed a mid-year business review and are very encouraged by the plans that will be implemented in the remainder of this year. The company plans to invest 75% – 100% of its gross margin improvements to drive sales, slow down its shrink reduction efforts to allow more time for training store employees, and make adjustments in its marketing centralisation initiative to ensure a smooth transition.”
Safeway also plans to reduce its capital spending plans for 2002 by approximately 10% to US$1.9bn from US$2.1bn. Based on the company’s new profit and capital forecast, it expects to generate more than US$500m in free cash flow this year, which it plans to use to buy back stock or pay down debt, depending on market conditions and strategic alternatives.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe retailer also expects to record one-time charges in the range of US$60m to US$70m in the Q2 2002, for severance costs related to the restructuring of a 29-store labour contract, for severance and transition costs related to the centralisation of marketing functions, and for costs associated with 11-14 store closures.
