Albertsons 2013 Annual Report Download - page 30

Save-A-Lot gross profit as a percent of Save-A-Lot Net sales was 15.9 percent for fiscal 2013 compared with
17.1 percent last year. The 120 basis point decrease in Save-A-Lot gross profit rate is primarily due to a 100 basis
point impact from competitive price investment with the remaining decrease primarily due to higher advertising
costs.
Independent Business gross profit as a percent of Independent Business Net sales was 4.5 percent for fiscal 2013
compared to 4.8 percent last year. The 30 basis point decline in Independent Business gross profit is primarily
due to a 50 basis point impact from gross margin investment and change in business mix offset in part by a 20
basis point benefit from a lower LIFO charge and lower employee-related expenses.
Selling and Administrative Expenses
Selling and administrative expenses for fiscal 2013 were $2,445, compared with $2,222 last year, an increase of
$223 or 10.0 percent. Included in Selling and administrative expenses is a net $275 charge including non-cash
property, plant and equipment impairment charges of $227 predominantly related to abandoned software
projects. In addition, Selling and administrative costs included employee-related expenses, comprised primarily
of severance and labor buyout costs of $36 and store closure and exit costs of $22, partially offset by a cash
settlement received from credit card companies of $10. Excluding these items, the remaining reduction in Selling
and administrative expenses is primarily due to lower sales volume.
Selling and administrative expenses for fiscal 2013 were 14.3 percent of Net sales compared to 12.8 percent of
Net sales last year. When adjusted for the above items, Selling and administrative expenses for fiscal 2013 were
12.7 percent of Net sales, compared to 12.8 percent of Net sales last year.
Goodwill and Intangible Asset Impairment Charges
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.
During fiscal 2013, the Company performed reviews of goodwill and intangible assets with indefinite useful lives
for impairment, which indicated that the carrying value of Independent Business’s intangible assets with
indefinite useful lives exceeded their estimated fair values. In fiscal 2013, the Company recorded a non-cash
intangible asset impairment charge of $6 in the Independent Business segment. The Company recorded a non-
cash goodwill impairment charge of $92 for fiscal 2012.
Operating Loss
The operating loss from continuing operations for fiscal 2013 was $157 compared with operating earnings of $96
last year. The operating loss from continuing operations for fiscal 2013, includes non-cash property, plant and
equipment impairment charges of $227, employee-related expenses, primarily severance and labor buyout costs
of $36, store closure costs of $22 and net lower goodwill and intangible asset impairment charges of $86 from
fiscal 2012, partially offset by a cash settlement received from credit card companies of $10 before tax. In
addition, excluding the above items operating earnings were primarily impacted by unfavorable Gross profit in
the Save-A-Lot and Independent Business segments.
Retail Food operating loss for fiscal 2013 was $420 or negative 8.9 percent of Retail Food net sales compared
with an operating loss $328 or negative 6.7 percent of Retail Food net sales last year, an increase in the operating
loss of $92. For fiscal 2013 Retail Food operating loss from continuing operations includes non-cash property,
plant and equipment impairment charges of $203 partially offset by a cash settlement received from credit card
companies of $10. For fiscal 2012 Retail Food operating loss includes goodwill impairment charge of $92.
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