BOISE — The sluggish economy and intense competition sent second quarter profits down 37 percent at Albertsons Inc., the nation's second-largest food and drug retailer said Thursday.
But net income still exceeded Wall Street projections, and Chairman Larry Johnston indicated sales trends were finally beginning to swing up.
Albertsons said net income for the three months ending July 31 of $162 million, or 44 cents per share, compared with $257 million, or 63 cents a share, a year ago.
Analysts surveyed by Thomson First Call had been expecting 43 cents per share.
Wall Street was pleased with the numbers. Shares of Albertsons stock closed up $2.04 to $23 on the New York Stock Exchange.
For the quarter, revenues were $9.1 billion, up from $8.9 billion a year earlier.
For the first six months of the year, the company reported a profit of $334 million, or 90 cents per share, on $18 billion in sales, compared to $92 million in net income, or 23 cents a share, on $17.9 billion in sales during the first half of 2002.
The Boise-based company, which spent much of 2002 extricating itself from unprofitable markets, said second-quarter sales at stores open at least a year fell about 1 percent.
But Johnston said new pricing and promotional programs initiated last spring began to show results in late July.
While the company remains on track to achieve $750 million in expense savings by the end of 2004, Johnston said heightened competition has prompted more attention to cutting costs.
He also reaffirmed the company's estimate of total earnings for 2003 of between $1.70 and $1.75 a share.
Analyst Stephen Chick at J.P. Morgan called the store sales figures disappointing, but said it appears "that in general things for the group are going in the right direction. It's only marginal, but at least you know they're going in the right direction. Whether that's sustainable, we don't know."
Albertsons employs 200,000 workers at about 2,300 stores and other facilities in 31 states, including Utah.