REAL ESTATE

Report: Fresh & Easy Not Meeting Sales Goals

BY CSA STAFF

New York An industry consultant said that Fresh & Easy Neighborhood Market stores have not yet come close to achieving the sales levels Tesco officials were originally hoping for, according to supermarketnews.com.

Speaking on Wednesday with investors in the United States and United Kingdom in a conference call sponsored by New York-based Citigroup, Jim Prevor said the 52 Fresh & Easy stores that have opened since November are averaging weekly sales volumes of $50,000 to $60,000, or about $5 per square foot—below the goal of $200,000 a week and $14-$22 in sales per square foot the company had projected.

Prevor said the volume estimates are based on discussions with competitors, vendors, industry observers and Fresh & Easy store managers.

In other news, Fresh & Easy Neighborhood on Thursday opened the doors to its 50th store in Palm Desert, California.

Last month, the company announced an expansion into Northern California, with 18 stores in the Bay Area slated to begin opening in 2009.

Fresh & Easy will open an additional three stores by the end of the week—one in North Las Vegas and two in Henderson, Nev. An announcement of store locations in the Sacramento region will occur by the end of the month.

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Whole Foods reports 31.4% 1Q sales increase

BY CSA STAFF

AUSTIN, Texas Whole Foods Market today reported that first quarter sales 31.4% to approximately $2.5 billion. Comparable-store sales increased 9.3% on top of a 7% increase in the prior year. Identical-store sales, excluding five relocated stores and three major expansions, increased 7.1% on top of a 6.2% increase in the prior year.

According to Whole Foods, net income was approximately $39.1 million, and diluted earnings per share were 28 cents. The company estimates the negative impact on net income from Wild Oats was approximately $11.9 million, or 8 cents per diluted share, in the quarter.

“We realize there are a lot of questions out there about how a slowing economy might impact our sales. Historically, our sales have been highly resilient during economic downturns. We attribute our strong sales to many factors, including our loyal core customers and their dedication to a natural and organic lifestyle, our high percentage of perishable product sales, and our extensive selection of high-quality prepared foods that attracts customers trading down from restaurants,” said John Mackey, chairman, ceo, and co-founder of Whole Foods Market. “In addition, we sell a high percentage of relatively small-ticket items, and we are better positioned today than we ever have been from a value perspective. Given our prior experience, strong year-to-date comps, easier year-over-year comparisons, and the increased number of new stores entering the comp base, we are confident in reaffirming our comp guidance of 7.5% to 9.5% for the fiscal year.”

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Safeway reports slight 4Q earnings drop

BY CSA STAFF

PLEASANTON, Calif. Safeway today reported that net income for its 2007 fourth quarter fell to 301.1 million from $307.9 million in the fourth quarter of 2006. Diluted earnings per share were 68 cents in the fourth quarter of 2007 compared to 69 cents in the fourth quarter of 2006. The company noted that diluted earnings per share in the fourth quarter of 2006 was increased by 8 cents due to various favorable tax items.

The company reported that total sales increased 6.8% to $13.4 billion in the fourth quarter of 2007 compared to $12.5 billion in the fourth quarter of 2006. Safeway said that contributions from Lifestyle stores, increased fuel sales and an increase in the Canadian dollar exchange rate drove this increase. Identical-store sales increased 4.4% in the fourth quarter of 2007. Excluding fuel, identical-store sales increased 2.7%.

“We are pleased with our performance in the fourth quarter of 2007,” said Steve Burd, chairman, president, and ceo. “Excluding the 8 cents tax benefit in the fourth quarter of 2006, our diluted earnings per share increased by 11.5%.”

Net income for the year 2007 was $888.4 million ($1.99 per diluted share) compared to $870.6 million ($1.94 per diluted share) in 2006. Sales increased 5.2% to $42.3 billion in 2007 from $40.2 billion in 2006 primarily because of Safeway’s marketing strategy, Lifestyle store execution, increased fuel sales and an increase in the Canadian dollar exchange rate. Identical-store sales, excluding fuel, increased 3.4%.

For the fiscal year 2008, Safeway expects diluted earnings per share to be in the range of $2.25 to $2.35 per share. Identical-store sales, excluding fuel, are expected to grow 3% to 3.2%.

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