Albertsons 2007 Annual Report Download - page 26

T
he performance graph above is being furnished solely to accompany this Annual Report on Form 10-K pursuant
to Item 201(e) o
f
Regu
l
at
i
on S-K,
i
s not
b
e
i
ng
fil
e
df
or purposes o
f
Sect
i
on 18 o
f
t
h
e Secur
i
t
i
es Exc
h
ange Act o
f
1934, as amended, and is not to be incorporated b
y
reference into an
y
filin
g
of the Compan
y
, whether made
before or after the date hereof, regardless of any general incorporation language in such filing
.
I
TEM 6.
S
ELE
C
TED FINAN
C
IAL DAT
A
T
he information called for by Item 6 is found within the Five Year Financial and Operating Summary on
pages F-
2
–F-
3
.
I
TEM 7. MANA
G
EMENT’
S
DI
SCUSS
I
O
N AND ANALY
S
I
SO
F FINAN
C
IAL
CO
NDITI
O
N AND
R
E
S
ULT
S
OF OPERATION
S
O
VERVIE
W
SUPERVALU
i
s one o
f
t
h
e
l
ar
g
est
g
rocer
y
compan
i
es
i
nt
h
eUn
i
te
d
States. T
h
e Compan
y
operates
i
n two
se
g
ments of the
g
rocer
y
industr
y
, Retail food stores and Suppl
y
chain services, which includes food distributio
n
a
n
d
re
l
ate
dl
og
i
st
i
cs support serv
i
ces. At Fe
b
ruary 24, 2007, we con
d
ucte
d
our reta
il
operat
i
ons t
h
roug
h
a tota
l
o
f
2,478 stores of which 858 are licensed locations. Store counts are ad
j
usted for the planned sale of 18 Scott’
s
stores and the sale or closure of 10 Jewel-Osco stores in the Milwaukee area. Princi
p
al formats includ
e
com
bi
nat
i
on stores (
d
e
fi
ne
d
as
f
oo
d
an
dd
rug),
f
oo
d
stores an
dli
m
i
te
d
assortment
f
oo
d
stores. Our Supp
l
yc
h
a
i
n
serv
i
ces operat
i
ons networ
k
spans 48 states an
d
we serve as pr
i
mar
yg
rocer
y
supp
li
er to approx
i
mate
ly
2,200
stores, in addition to our own re
g
ional banner store network, as well as servin
g
as secondar
yg
rocer
y
supplier to
a
pprox
i
mate
l
y 400 stores. SUPERVALU
i
s one o
f
t
h
e
l
argest compan
i
es
i
nt
h
eUn
i
tes States grocery c
h
anne
l
.
The Albertsons Ac
q
uisitio
n
On June 2, 200
6
(the “Acquisition Date”), the Company acquired New Albertson’s, Inc. (“New Albertsons”
)
consistin
g
of the core supermarket businesses (the “Acquired Operations”) formerl
y
owned b
y
Albertson’s, Inc
.
(“Albertsons”) operatin
g
under the banners of Acme Markets, Bristol Farms, Jewel-Osco, Shaw’s Supermarkets
,
Star Mar
k
et, t
h
eA
lb
ertsons
b
anner
i
nt
h
e Intermounta
i
n, Nort
h
west an
d
Sout
h
ern Ca
lif
orn
i
a reg
i
ons, t
h
ere
l
ate
d
in-store pharmacies under the Osco and Sav-On banners, 10 distribution centers, certain re
g
ional offices and
certain corporate offices in Boise, Idaho; Glendale, Arizona and Salt Lake Cit
y
, Utah (the “Acquisition”)
.
Th
e Acqu
i
s
i
t
i
on great
l
y
i
ncrease
d
t
h
es
i
ze o
f
t
h
e Company. T
h
e Acqu
i
s
i
t
i
on a
l
so great
l
y
i
ncrease
d
t
h
ere
l
at
i
v
e
size of the Compan
y
’s Retail food se
g
ment compared to its Suppl
y
chain services se
g
ment. In fiscal 2007, 74.9
percent of our Net sales and 90.3 percent of our Operatin
g
earnin
g
s came from our Retail food se
g
ment
,
compared to 53.5 percent and 61.8 percent, respectively, in fiscal 2006. In fiscal 2008, we expect the Company’
s
R
etail food se
g
ment will contribute approximatel
y
80 percent of the Compan
y
’s Net sales
.
T
h
eIn
d
ustr
y
an
d
t
h
e Economic Environment
T
he retail
g
rocer
y
industr
y
can be characterized as one of continued consolidation and rationalization, with the
Acquisition being one of the largest acquisitions in the history of the industry. Grocery retailers also continue t
o
compete aga
i
nst an
i
ncreas
i
ng num
b
er o
f
compet
i
t
i
ve
f
ormats t
h
at are a
ddi
ng square
f
ootage
d
evote
d
to
f
oo
d
an
d
g
roceries such as supercenters, club stores, mass merchandisers, dollar stores, dru
g
stores and other alternat
e
f
ormats
.
Th
e grocery
i
n
d
ustry
i
sa
l
so a
ff
ecte
db
yt
h
e genera
l
econom
i
c env
i
ronment an
di
ts
i
mpact on consumer spen
di
ng
behavior. We would characterize fiscal 2007 as a
y
ear with continued economic
g
rowth, continued hi
g
h fuel
20