Skip navigation

AMERICAN SAYS STRIKE HURT SALES

SALT LAKE CITY -- American Stores Co. here said an April strike that affected its 180 northern California Lucky Stores units contributed to a 5.3% drop in sales for the first quarter ended April 29.Sales for the quarter were $4.36 billion, compared to $4.61 billion in the comparable period of 1994.As reported, the company was involved in a nine-day labor dispute with the United Food & Commercial Workers

SALT LAKE CITY -- American Stores Co. here said an April strike that affected its 180 northern California Lucky Stores units contributed to a 5.3% drop in sales for the first quarter ended April 29.

Sales for the quarter were $4.36 billion, compared to $4.61 billion in the comparable period of 1994.

As reported, the company was involved in a nine-day labor dispute with the United Food & Commercial Workers Union, which represents approximately 32,000 northern California clerks and butchers in more than 400 Safeway, Lucky and Save Mart stores.

Union employees at 208 Safeways walked out over proposed changes in their health care benefits. The three operators all had the same basic collective bargaining agreement, and in a show of solidarity with Safeway, Lucky and Save Mart locked out about 16,000 UFCW workers. The dispute was ultimately resolved when management extended the workers' old contract for three years with little or no changes in pay or benefits.

The 1,616-store operator also said the decline in volume reflected the sale of its 33-store Star Market chain in Cambridge, Mass., to investors last summer, as well as the sale of its 45-store Acme Markets subsidiary in Malvern, Pa., to Penn Traffic Co., Syracuse, N.Y., in January.

Excluding the store divestitures, and after giving effect to the estimated impact of the strike, total sales would have been $4.4 billion in the quarter, compared to $4.3 billion in the same period last year, the company said.

Same store sales increased 0.5%. Excluding the estimated impact of the labor dispute, same store sales would have increased 1.5%, the chain said. Despite the decreased sales volume, Victor L. Lund, president and chief executive officer, said in a statement that the Lucky stores "hardly missed a beat" during the strike because many non-UFCW employees assumed extra responsibilities in the affected stores. Net earnings for the quarter were $53.9 million, or 37 cents per share, a 12.3% increase over earnings of $48 million, or 34 cents per share, in the same period in 1994.

The company said the most recent results included a charge of 2 cents per share related to the labor dispute. Additionally, first-quarter earnings were impacted

by a 2.5% increase in the average number of shares outstanding resulting from the redemption of the company's 7.25% convertible subordinated notes in March, as reported. The conversion reduced first-quarter interest expense by approximately $1.3 million.

Meanwhile, last year's first-quarter earnings included costs of 5 cents per share related to expenses from the consolidation of the company's information technology data centers as well as a voluntary severance program initiated at Acme. Operating profit from continuing operations increased 8.5% to $134.6 million. This included the costs of American's previously disclosed re-engineering efforts, internally referred to as the "Delta" project, as well as a loss associated with the company's 11-store start-up price impact operation, Super Saver. Together, these factors decreased operating profit by $11.9 million before tax, or 5 cents per share, the company said.

"Our re-engineering programs to integrate the supply chain functions remain on target," Lund said. "In the first quarter, the Delta project's costs totaled approximately $4.5 million, but were offset with corresponding savings. Our plan is to continue to offset the costs with savings until the project's completion."

Gary Giblen, managing director of Smith Barney, New York, said that American is "doing all the right things right now."

"Their same store sales were up about 2% in April and May, showing their ability to get their sales going and indicates a sustained recovery pattern," he said.

1st-QUARTER RESULTS

Qtr Ended 4/29/95 4/30/94

Sales $4.36 billion $4.61 billion

Change -5.3%

Same-store +0.5%

Net Income $53.9 million $48 million

Change +12.3%

Inc/Share 37 cents 34 cents

TAGS: News