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Safeway reports Q4 sales, projects Q1 comps of 2% based on strong uptake in loyalty program

BY Michael Johnsen

PLEASANTON, Calif. — Safeway on Thursday reported a sales increase of 1.3% to $44.2 billion in 2012 for its fiscal year ended Dec. 29, driven by increased fuel sales and a same-store sales increase of 0.5% (excluding fuel), the grocer reported. Safeway chairman and CEO Steve Burd projected identical sales as high as 2% in the first quarter of 2013, in part because of the success Safeway has had with its loyalty program Just 4 U. 

"As Just 4 U matures … our volume, our marketshare and our ID sales should only continue to improve," Burd said. Safeway currently has 5.4 million active Just 4 U cardholders who represent 45% of the grocer’s sales. Burd expects Just 4 U customers will one day be responsible for 65% of Safeway sales. Burd noted that Safeway is signing some 50,000 Just 4 U cardholders each week. Burd wasn’t sure if that adoption rate was sustainable through the rest of the year, "but if we do, we should cross over 55%-plus of our sales covered by Just 4 U households."

"Mobile users [participating in the program] are higher than we have predicted," noted Robert Edwards, Safeway president. Mobile users’ contribution to incremental sales is higher and their trips are more frequent, he added.

"[Contribution] is higher by about 40%," Burd said. 

And Safeway is not concerned about any reduction in disposable income from the increase in Social Security tax and delay in income tax returns. In fact, the change in disposable income "plays to the strength of Just 4 U," Edwards noted, because Safeway can target those customers with personalized promotions. 

"Longer term, you will see others try to personalize their efforts with consumers," Burd said. "The retailer that comes to mind that’s done more of this than anyone is actually Nordstrom," he added. "The wave of the future is personalization. We will come to a point where the shelf pricing will become irrelevant."

Safeway plans to gravitate more and more toward personalized promotions through Just 4 U, Burd said. "There is an opportunity to get out of paper ads and make the ad itself personalized for every household." 

And in the second quarter, Safeway will be launching its much-anticipated wellness initiative. Initially, Safeway’s wellness program was to have launched in the fourth quarter of 2012. However, Safeway’s technology partner had delayed that launch to ensure the infrastructure was in place to support a full roll-out, Burd said.  

Net income for the fiscal year 2012 increased to $596.5 million, to $2.40 per diluted share, up from net income for 2011 of $516.7 million or $1.49 per diluted share. Safeway’s fiscal year 2011 ended on December 31, 2011 and therefore captured New Year’s holiday sales. Safeway’s fiscal year 2012 ended on December 29, 2012 and therefore did not capture all New Year’s holiday sales.

Safeway invested $240.4 million in capital expenditures in the fourth quarter of 2012. The company opened three new Lifestyle stores, completed two Lifestyle remodels and closed six stores. For the year, Safeway invested $927.6 million in capital expenditures, opened nine new Lifestyle stores, completed four Lifestyle remodels and closed 46 stores (including 25 Genuardi’s stores sold or closed during the year).

 

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Women, baby boomers supplement more often

BY Michael Johnsen

Almost 3-in-4 women surveyed supplement their diets (74%) versus 65% of men, and 81% of consumers older than 55 years reported supplementing versus 72% of consumers between the ages of 35 years and 54 years, according to an online survey of more than 900 AccentHealth viewers conducted in late 2012. As many as 70% of the generation of respondents between the ages of 18 years and 34 years reported they take vitamins and/or supplements.

To see more Patient Views, click here.

Patient Views is a new, exclusive consumer insights feature that appears in every edition of DSN magazine, as well as the daily e-newsletter DSN A.M. If you could ask 4,000 patients anything at all, what would it be? Send your questions to reder@lf.com.

Source: AccentHealth. To view the demographic breakdown of participants, click here.

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Walmart bests forecasts amid soft sales

BY Mike Troy

BENTONVILLE, Ark. — Walmart saw a diminutive 1% increase in same-store sales at U.S. stores, but beat analyst estimates and delivered better-than-expected fourth-quarter profits, the company announced Thursday.

Walmart said total sales increased 3.9% to $127.1 billion compared to $122.3 billion last year. Without the benefit of a favorable currency exchange situation, sales would have increased a lesser 3.7% to $126.8 billion. Full year sales increased by 5% to $466.1 billion compared to last year’s total of $443.8.

Fourth-quarter profits increased 7.9% to $5.6 billion and earnings per share of $1.67 were 10.6% higher than the $1.51 reported the prior year and well ahead of the company’s guidance and analysts’ consensus estimate. Walmart had forecast profits in a range of $1.53 to $1.58 and analysts were looking for $1.57.

"Walmart topped off a really good year with a solid fourth quarter, and I’m proud of what we accomplished as a team," said Mike Duke, president and CEO of Wal-Mart Stores, Inc. Every day our associates around the world deliver on our mission to help customers save money so they can live better. Together, we added $22 billion in sales to top $466 billion. Walmart U.S. was a key driver of our 5% sales increase."

The 1% U.S. comp increase was at the low end of a forecast range which called for a 1% to 3% increase and a slow start to the first quarter has the company forecasting flat same store sales.

To offset the deceleration in U.S. comps, which can be attributed to a range of external economic pressures, Walmart highlighted its volume growth and market share gains. The company said its U.S. division added more than $10 billion in net sales last year, including $4.7 billion as a result of same store sales growth. The company said it gained share in categories such as food, consumables, health and wellness, entertainment and toys.

"Despite comps at the low end of the guidance, our market share gains, as noted by Nielsen and NPD, along with our two-year positive comp trend indicates the underlying strength of Walmart’s business," said Walmart U.S. president and CEO Bill Simon. "Comp sales grew by 1% for the quarter, lapping a solid 1.5% comp last year. This represented $743 million in comp growth for the quarter."

Looking ahead, Walmart faces a challenging comparison against a first-quarter 2012 U.S. comp increase of 2.6% and a variety of headwinds such as increased gas prices and reductions in take home pay. Against this backdrop, Simon expressed confidence that the company’s familiar low price strategy will continue to resonate with shoppers.

However, a slow start to February caused largely by a delay in tax refunds has dimmed enthusiasm for the first-quarter and resulted in a flat same store sales forecast.

"We continue to monitor economic conditions that can impact our sales, such as rising fuel prices, changes in inflation and the payroll tax increase," Simon said.

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