American Stores Co. said sales increased 4.4 percent for the 13-week first quarter ended April 30 to $3.59 billion compared to $3.44 billion for the first quarter of 1987.
Net earnings per common share for the first quarter were $27.05 million, equal to 69 cents per common share, as compared to $35.01 million, or 92 cents per common share, for the first quarter of 1987. A lower federal income tax rate in 1988 compared to 1987 increased first quarter earnings by 7 cents per common share.American said its LIFO (ast-in, first-out) method of inventory accounting reduced earnings by 18 cents per common share this year as compared to 12 cents per common share in 1987.
Operating profit for the first quarter declined 19.8 percent to $74.74 million compared to $93.18 million for the first quarter in 1987. The company said decrease in operating profit was a result of a decision by the board of directors to commit $50 million in 1988 to sales improvement programs.
"This investment is aimed at reversing the relatively flat sales trend of recent years, by enhancing the sales base and improving market share in certain highly competitive markets," said a company spokesman. "While the company's plan placed profit margins under pressure at Acme Markets Inc., Alpha Beta Co., Skaggs Alpha Beta and Buttrey Food Stores, the operating profit for the first quarter was slightly ahead of budget."
He said directors made a committment this year to invest in improved sales performance in order to insure the company's long term growth and profitability.
First quarter sales at Alpha Beta Stores Inc., the company's western grocery operations, increased 4.3 percent to $1.16 billion. Like stores sales increased 5.9 percent for the quarter as compared to a decrease of less than 1 percent in like stores sales in 1987.
On a regional basis Alpha Beta Co.'s like stores sales increased 4.1 percent to $645.86 million as compared to a like stores sales increase of 3.3 percent in the first quarter of 1987. Operating profit at Alpha Beta Co. decreased 43.6 percent to $6.70 million compared to operating profit of $11.89 million for the first quarter of 1987.
Budgeted operating profit for the first quarter of 1988 was $8.48 million. In response to market pressure, Alpha Beta said it lowered prices in both Northern and Southern California to protect its market position.
The average common shares outstanding in the first quarter were 30,136,000 compared to 31,063,000 for the prior year. At the quarter end the company operated 1,462 stores in 39 states.