Albertsons 2015 Annual Report Download - page 32

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Save-A-Lot
Save-A-Lot continues to drive sales and performance through its meat and produce programs, pricing enhancements, improved
grocery and merchandise offerings and incremental marketing activities. Save-A-Lot is focused on long-term sales and earnings
growth through execution of these initiatives at existing locations and expansion through corporate and licensee store
development.
Save-A-Lot added new corporate stores in fiscal 2015 and also acquired existing stores from licensees. Save-A-Lot considers
carefully when to acquire existing stores from licensees, including determining whether such acquisition will improve the brand
image and position the network for future growth. In fiscal 2015, the Company added 46 new Save-A-Lot stores, comprised of
23 new licensee stores and 23 new corporate stores, and 46 Save-A-Lot stores were closed, comprised of 37 licensee stores and
nine corporate stores. In addition, 39 stores were acquired from licensees and four corporate stores were sold to licensees. One
new distribution center was added to Save-A-Lot's network in fiscal 2015 to support licensee and corporate store growth in the
western United States. In fiscal 2016, the Company expects to add corporate and licensed stores to the existing Save-A-Lot
network, including in new geographic markets, with the majority of those stores expected to be corporate stores.
Total Save-A-Lot retail square footage for Company-operated stores as of the end of fiscal 2015 was approximately 7 million,
an increase of approximately 13.8 percent from the end of fiscal 2014, primarily attributable to acquisitions of Save-A-Lot
licensee stores and new corporate stores.
Retail Food
Retail Food continues to focus on driving sales and performance through competitive pricing and promotional activities,
enhanced perishable offerings, store remodels and resets. Private label product offerings, including organic products, and
marketing investments continue to expand. Management believes the Company has a quality private label program that can
build customer loyalty and also drive profitable sales growth.
In fiscal 2015, seven stores were acquired from Roundy’s Inc. in the Minneapolis / St. Paul market. In fiscal 2015, the
Company entered into an agreement to purchase two retail stores to be divested as part of the Safeway Merger, which the
Company expects to close on in the first quarter of fiscal 2016 and operate as County Market stores in the state of Washington.
Total Retail Food square footage as of the end of fiscal 2015 was approximately 11 million, an increase of approximately 9.2
percent from the end of fiscal 2014, primarily attributable to store acquisitions from Roundy's Inc.
Fiscal 2015 Highlights
Sales were driven by incremental investments to lower prices to customers and increased capital investments. Highlights of the
results of these investments include:
• Positive Independent Business sales to existing customers for fiscal 2015.
• Positive Save-A-Lot identical store sales, including increased licensee purchase concentration rates, for each quarter in
fiscal 2015.
• Positive Retail Food identical store sales for each quarter in fiscal 2015.
• Targeted price investments were combined with incremental marketing investments in media, print and digital.
• Private brands penetration improved 390 and 50 basis points within Save-A-Lot and Retail Food, respectively.
Improvements to the Company's financial condition include:
• Refinancing $350 of the Company's 8.00% Senior Notes due May 2016 with $350 of registered 7.75% Senior Notes due
November 2022, which extended the maturity by over six years and lowered the interest rate.
• Amending the Revolving ABL Credit Facility to lower the interest rate and extend its maturity.
• Lump sum settlement payments of $272 were made to deferred vested pension plan participants in fiscal 2015 that reduced
the pension benefit obligations, at the time of the offer, as well as the number of plan participants; however, assumption
changes regarding mortality tables, the benefit obligation discount rate and expected rates of return reduced the funded
status of the Company's defined benefit pension plan.
• Additional discretionary pension contributions, including $50 in the fourth quarter of fiscal 2015 and a $47 excess
contribution in the third quarter fiscal 2015 that satisfied the PBGC (defined below) binding term sheet requirements. The
discretionary contributions were made, in part, to offset the decrease in the funded status (described above) of the
Company's defined benefit pension plan.
Financial highlights for fiscal 2015 compared to fiscal 2014 include:
• Net sales increased $667 primarily due to Save-A-Lot positive network identical store sales of 5.8 percent and new store
sales, $313 from the additional week in fiscal 2015, and Retail Food new store sales and positive identical store sales of