Albertsons 2010 Annual Report Download - page 28

closure of non-strategic stores of $200 before tax ($121 after tax, or $0.58 per diluted share), settlement costs
for a pre-Acquisition Albertsons litigation matter of $24 before tax ($15 after tax, or $0.07 per diluted share)
and other Acquisition-related costs (defined as one-time transaction costs, which primarily include supply
chain consolidation costs, employee-related benefit costs and consultant fees) of $14 before tax ($8 after tax,
or $0.04 per diluted share). Results for fiscal 2008 include Acquisition-related costs of $73 before tax ($45
after tax, or $0.21 per diluted share).
Net Sales
Net sales for fiscal 2009 were $44,564, compared with $44,048 for fiscal 2008. Retail food sales were
77.8 percent of Net sales and Supply chain services sales were 22.2 percent of Net sales for fiscal 2009,
compared with 78.0 percent and 22.0 percent, respectively, for fiscal 2008.
Retail food sales for fiscal 2009 were $34,664, compared with $34,341 for fiscal 2008, primarily reflecting the
extra week of sales of approximately $578 in fiscal 2009, partially offset by the impact of store dispositions
and negative identical store retail sales growth (defined as stores operating for four full quarters, including
store expansions and excluding fuel and planned store dispositions). For fiscal 2009, as compared to fiscal
2008, identical store retail sales growth was negative 1.2 percent based on the same 52-week period for both
years, as a result of a soft sales environment and higher levels of competitive activity.
During fiscal 2009, the Company added 44 new stores through new store development and closed 97 stores,
including planned dispositions.
Total retail square footage as of the end of fiscal 2009 was approximately 69 million, a decrease of 2.8 percent
from the end of fiscal 2008. Total retail square footage, excluding store dispositions, increased 1.4 percent
from the end of fiscal 2008.
Supply chain services sales for fiscal 2009 were $9,900, compared with $9,707 for fiscal 2008, primarily reflecting
the extra week of sales of approximately $165 in fiscal 2009 as well as the pass through of inflation and new
business growth, partially offset by the on-going transition of a national retailer’s volume to self distribution.
Gross Profit
Gross profit, as a percent of Net sales, was 22.7 percent for fiscal 2009 compared with 22.9 percent for fiscal
2008. The decrease is primarily attributable to investments in price and higher levels of promotional spending,
higher LIFO charges and inventory valuation charges, partially offset by lower shrink.
Selling and Administrative Expenses
Selling and administrative expenses, as a percent of Net sales, were 19.6 percent for fiscal 2009, compared with
19.1 percent for fiscal 2008. The increase in Selling and administrative expenses, as a percent of Net sales, is
attributable to charges primarily related to the closure of non-strategic stores in the fourth quarter of fiscal 2009,
higher employee-related costs and higher occupancy costs, partially offset by lower Acquisition-related costs.
Goodwill and intangible asset impairment charges
In accordance with accounting standards, the Company applies a fair value-based impairment test to the net
book value of goodwill and intangible assets with indefinite useful lives on an annual basis and on an interim
basis if certain events or circumstances indicate that an impairment loss may have occurred. For the third
quarter of fiscal 2009, the Company’s stock price had a significant and sustained decline and book value per
share substantially exceeded the stock price. The Company recorded impairment charges of $3,524, comprised
of $3,223 to goodwill at certain Retail food reporting units and $301 to trademarks and tradenames related to
the Acquired Trademarks and other intangible assets. The impairment of goodwill and intangible assets with
indefinite useful lives reflects the significant decline in the market price of the Company’s common
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