What's in store for Albertsons
The grocery retailer certainly has taken a major hit, saying last week that labor disputes "materially impacted" third-quarter earnings, which fell a whopping 51% from a year ago. Not only that, gross margins also deteriorated while operating expenses increased faster than sales. Translated, that means management is finding it harder to bring down prices and still make a buck. Despite the strike, sales did increase slightly. But on a same-store basis, which compares results at similar stores open at least a year and is a key industry statistic, sales dropped. If not for the walkout, same-store sales would have been positive, according to the company.
Once the strike is over, there's no guarantee that customers will instantly turn around and walk back through Albertsons' doors. Some may, but many will likely continue shopping at other grocers, eating into the company's market share. Even if the dispute is settled soon, it's still tough slugging ahead with the threat of increased competition and cost pressures from non-unionized superstores like Wal-Mart
It's hard to get a grip on a company that doesn't seem to have a grip on itself. Over the past year, management has changed its earnings forecast several times, before finally withdrawing any guidance last month and declining to give investors any earnings outlook last Friday, saying the strike's impact can't be estimated.
The strike is only the latest knock to a company that has been succumbing to competitive pressures for some time. With rapidly expanding warehouse stores like Walmart and Costco
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