For Immediate Release
Chicago, IL – February 15, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Safeway , Weis Markets, Inc. , SUPERVALU Inc. (SVU - Analyst Report) , The Kroger Co (KR - Analyst Report) and Wal-Mart Stores (WMT - Analyst Report) .
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: https://at.zacks.com/?id=5513
Here are highlights from Tuesday’s Analyst Blog:
Safeway to Shed Genuardi Stores
Recently, Safeway entered into an agreement to sell three of its Genuardi's stores in Pennsylvania to Weis Markets, Inc. . However, the financial terms of the deal have not been disclosed.
The company’s decision was based on the prevailing economic scenario, which has led to food cost inflation during the first three quarters of 2011 and made consumers more price-sensitive. Retail inflation remains a constant overhang and companies like Safeway may find it difficult to pass on the increased prices to its customers owing to the tough competition.
This tough scenario has also induced certain consumers to opt for a less expensive mix of products or search for discounts on grocery items, all of which have impacted Safeway's sales.
The company expects that these difficult economic conditions to persist for the time being. In the last reported quarter, gross margin of the company contracted 114 basis points (bps) year over year to 27.0%. Operating margin also decreased 11 bps year over year to 2.46%.
In an attempt to control operating expenses and to increase focus on areas with strong presence, the company entered into another agreement with Giant Food Stores (a division of Ahold, US) in early January to sell 16 of its Genuardi's stores in the greater Philadelphia area. Moreover, the company has closed its distribution centers in British Columbia and Vancouver to lower its operating expenses further.
Additionally, in order to improve its bottom line amid a sluggish economic environment, Safeway has undertaken cost reduction initiatives focused on cost of goods sold and supply chain efficiencies. The company is building a distribution network in the US where some of its existing card content providers are becoming distributors, thereby reducing the number of retailers in the market.
Moreover, the company is focusing on shrink reduction, which will in turn increase its inventory level. Safeway expects pricing as well as volume to improve as the year progresses and to further benefit from the shrink reduction in upcoming quarters.
However, the company confronts a wide spectrum of competitive threats, especially from players like SUPERVALU Inc. (SVU - Analyst Report) , The Kroger Co (KR - Analyst Report) and Wal-Mart Stores (WMT - Analyst Report) . Currently, we are Neutral on Safeway, which corresponds to the Zacks #3 Rank (Short-term Hold rating).
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: https://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: https://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at https://at.zacks.com/?id=5518.
Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339