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• A Financial Analysis of Albertsons

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Competitors

• Reviewed competitors
• Kroger
• Wal-Mart
• Costco
• Un-reviewed competitors
• Healthier-option, higher end stores such
• Whole Foods
• Central Market (H.E.B.)

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Brief Overview of Albertsons

• Total stores 2,487
• Stores located in 37 states
• Employees 241,000
• Profit margins 1.24
• Revenue 39 billion
• Pharmacies 2000
• Fueling Centers 236

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Historically at Albertsons

• 1969 partnership with Skaggs Companies, Inc.,
  creating the first food-drug combination stores
• 1999 addition of Jewel-Osco, Acme Markets, Sav-on
  and Osco Drug Stores

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Strategies

• Trim the fat
• Invest in the best
• Customers first
• Set the curve
• Energize us

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Cost Control and ROC

• Require suppliers to tag pallets
• Rate of Return on Capital is lower than there
  main competitors

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Customer-focus and Technology

• Shopping online
• New scanners
• Team up with Office Depot and Starbucks

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Associates

• Lawsuit Complained employees not getting paid
• Strike in California, 2004 Employees upset
  about health care plan

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Social Responsibility

• Environmental focus

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Brief Summary of Operations and Environmental
Practices

• Deployment of extensive energy reduction programs
  in stores and distribution centers
• Pilot testing of alternative fuels for diesel
  tractors and refrigerated trailer engines

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Recognition

• National Arbor Day Foundations Promise to the
  Earth award (April, 2005)
• EPAs Americas Marketplace Recycles! award
  (November, 2005)
• LEED Certification (November, 2005)

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LEED Certification

• Shaws Supermarket
• Developed on former industrially contaminated
  land
• Energy-efficient heating and air
• Environmentally controlled processes
• Refrigeration leak detection technology
• Water-saving fixtures

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Negative Media Publicity

• None regarding social policies

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Positive Aspects

• Creates public image
• Good business sense considering rising energy
  prices

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Negative Aspects

• Sole focus on environmental issues
• Lack of diversity in social responsibility

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Performance

• 2004
  2003
• Net Sales 39,897
  35,436
• Net Income 474
  556
• Gross Profit Margin 30.8
  31.3
• Net Profit Margin 1.1
  1.6

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Profitability and Turnover

• 2004
  2003
• ROE 0.082
  0.105
• ROA 0.026
  0.036
• Receivables turnover 61.380
  55.717
• Inventory turnover 9.331
  8.600

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Liquidity and Debt

• 2004
  2003
• Current ratio 1.051 1.187
• Quick ratio 0.232
  0.304
• Cash ratio 0.067
  0.074
• Debt/equity ratio 1.270 0.989

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Competitor Comparisons

• Albertsons
  Kroger Costco Wal-Mart Industry
• Net Sales 39,897 56,434
  52,935.2 285,222 42,201
• Net Income 444 -.14
  1,063.1 9054
• Gross Profit 30.77 24.94
  24.61 13.3 30.91
• Margin
• Net Profit 1.24 -0.03
  2.0 3.59
  1.05
• Margin

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Competitor Comparisons

• Albertsons
  Kroger Costco Wal-Mart Industry
  
• ROE 8.2
  0 21.8 13
  9.7
• ROA 2.6
  0 9.1 6.8
  2.8
• Inventory 9.331 9.139
  8.64 12.1 11.2
  
• Turnover
• Receivables 61.38 84.55
  181.6 141.693 43.7
• Turnover
• Current Ratio 1.051 1.014
  .92 1.218 1.15
• Quick Ratio .232 .208
  .172 .584
  .5

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Recommendations

• Strengths
• Environmental responsibility
• Growth in revenue
• Customer service and using new technology
  effectively

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Recommendations

• Growth areas
• Growing costs
• Ineffective labor relations
• Market positioning

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