Albertsons 2004 Annual Report Download - page 2

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Dear Shareholder:
This year, I am proud that SUPERVALU’s business operations delivered a standout year in fiscal 2004
marked by significant accomplishments and strong financial results.
SUPERVALU continued to build momentum. We stayed the course on our business strategies and made
substantial progress in our financial metrics. Unlike last year, which was clouded by macro-economic factors,
fiscal 2004 was a year of changing industry dynamics.
A long-time wholesale competitor declared bankruptcy; health care costs and pension expenses continued to
increase at double-digit rates, which challenged union contract negotiations across the country; and moderate
price inflation returned in some food categories. Today, we are witnessing transformation in the food retailing
industry as companies embark on large-scale infrastructure initiatives to respond to more intense competition and
drive sales improvements.
It is truly an exciting time in our industry, and I believe SUPERVALU is well positioned to continue our
success in this ever-changing environment. Our accomplishments in fiscal 2004 attest to our ability to adapt in a
changing landscape while maintaining our long-term strategies.
In fiscal 2004, we reported:
‰Sales of $20.2 billion
‰Net earnings of $280 million
‰Diluted earnings per share of $2.07
‰Debt to capital ratio of 46.7 percent, the lowest in more than a decade
‰Return on Invested Capital (ROIC), calculated on a 52-week basis, of 14.1 percent
Even with the extra week in fiscal 2004 compared to fiscal 2003’s 52-week year, we showed good progress.
The extra week contributed approximately $360 million in revenues and $0.07 in diluted earnings per share in the
fourth quarter.
Key Accomplishments
Fiscal 2004 performance is the result of many initiatives undertaken during the year. Our key
accomplishments in our two business engines will provide the fuel for continued success in fiscal 2005.
Our retail team did an exceptional job again in fiscal 2004. Throughout the year, we generated industry
leading retail comparable store sales growth that was broad based across our markets. Our strong merchandising
and store level execution continued to drive improvement in important benchmarks such as higher customer
counts and average ticket on a like-store basis.
At Save-A-Lot, our fastest growing retail format, we completed much of the staging work necessary to
accelerate the growth of this unique retail offering. In fiscal 2004:
‰We tested the new combination store prototype, which features both grocery products and general
merchandise at extreme value prices, and increased the pace of store conversions to this combination
store format;
‰We ended the fiscal year with nearly 200 combination stores within our 37-state Save-A-Lot store
network, including licensees. This was driven by the conversion of existing stores to combination units
and 75 new stores, including licensed stores, that we added to our network during the year;
‰We continued to invest in our distribution infrastructure with the relocation of three food distribution
centers and the opening of a general merchandise distribution center;
‰We expanded the general merchandise sourcing programs to support future growth; and
‰We began to install new technologies to enhance core systems in procurement and inventory
management.