American Stores Co. announced net earnings for its fiscal year ended Jan. 28 of $98.25 million, or $2.54 per common share, compared with net earnings for the year ending Jan. 30, 1988, of $154.31 million, or $4.19 per common share.
American Stores said results are not comparable due to a number of factors. Earnings per common share on a comparable basis increased 16.3 percent to $5.36 vs. $4.61 for the prior year. Reported net earnings for the quarter were $20.23 million, or 52 cents per common share, compared with $46.08 million, or $1.31 per common share, in the prior-year fourth quarter.Comparable earnings per common share for the quarter increased 21.0 percent to $1.90 from $1.57 for the prior-year quarter. Comparable operating profit for American's operating subsidiaries, excluding Lucky's results, increased 2.3 percent to $387.97 million for the year and 11.5 percent for the quarter to $131.48 million.
American Stores said the most significant adjustment for the year and the quarter relates to the acquisition of Lucky Stores Inc., which has been included in the operating results of American Stores Co. since June 2, 1988. Lucky Stores Inc. had a negative impact on earnings per common share of $1.97 for the year and 71 cents in the fourth quarter.
The company said its earnings were increased in 1988 by the termination of a defined benefit plan and reduced by an increase in insurance reserves at a captive insurance company. Additionally, in the fourth quarter the company charged to expense certain legal and related costs associated with Jewel Companies Inc.'s Salmonella lawsuits.
American Stores said it will continue to incur and expense legal defense costs in the future. These expenses reduced fourth-quarter earnings per common share by 40 cents.
Total sales increased to $18.5 billion, representing a 29.5 percent increase for the year and $5.4 billion, a 41.4 percent increase in the fourth quarter. The reported sales increases were principally due to the inclusion of Lucky Stores Inc.'s sales since the acquisition. Like-stores sales increased 5.8 percent for the year and 5.4 percent for the fourth quarter.
J.L. Scott, vice chairman and chief executive officer, said: "All of the regional companies showed strong like-store sales increases which exceeded inflation. For the year, American Food & Drug Inc. (formerly Skaggs Alpha Beta/Buttrey) turned in the strongest like-store sales performance increasing 9.8 percent.
"In the fourth quarter, American Drug Stores Inc.'s like-store sales increase was the highest among the regional companies at 9.4 percent."
"Operating profits continued strong with all regional companies exceeding budget for both the year and the quarter. We are particularly pleased with the improved performance by American Food & Drug Inc.'s positive operating profits in the fourth quarter, combined with strong sales gains.
"American Superstores' operating profits were impacted during the current year by the sales-enhancement program at Acme, which was undertaken for the purpose of improving long-term profitability."
Average common shares outstanding for the year were 30,185,000 in 1988 and 30,830,000 in 1987. Preferred dividends for the fourth quarter amounted to $4,293,000 in 1988 and $6,295,000 in 1987. The reduction is due to the redemption of American Stores Co. preferred B stock on Aug. 15, 1988. Year-to-date preferred dividends amounted to $21,439,000 in 1988 and $25,226,000 in 1987.