Albertsons profits drop highlights US sales weakness
Second biggest US grocer seeing aftermath of strike
US supermarket chain Albertsons has reported a fall in second-quarter profits, raising new concerns about the strength of consumer spending in the US.
Albertsons, the second biggest US supermarket operator, said its investment in promotions, aimed at restoring sales after the Southern Californian supermarket strike earlier this year, hit its performance targets. Profits for the quarter to July 29 were $125m, compared to $162m a year ago.
Albertsons said the five-month strike by supermarket workers in California, which also afftected rivals Safeway and Kroger, cost it $182m in sales. Across the quarter, same-store sales fell by 1.5 per cent in the quarter and were flat when the effect of the strike was factored out.
However, the retailer also raised wider concerns, saying it has seen no improvement in the retail environment during August, with sales still weak and high levels of competition from Wal-Mart, which has been discounting in order to attract customers after downgrading its own sales forecasts.
Albertsons operates 2,500 stores across the US, and bought the Shaw’s supermarket chain from Sainsbury’s earlier this year. The acquisition helped boost total sales, up to $10.2bn from $9bn a year ago.
