Strike Hurts Albertsons, Bodes Ill for Competitors

The company's gross profit margin, for instance, fell 49 basis points as a percentage of sales to 28.72%. Gross margin represents the difference between what a company charges customers for its products and the direct costs of selling those products, including vendor and occupancy expenses.

In addition to lost sales due to the strike, Albertsons gross margin was sunk by increased promotions and decreased prices, company officials said.

Meanwhile, Albertsons' operating expenses rose 92 basis points to 25.78% of sales. Lost sales as a result of the strike meant that expenses increased faster than revenue. Additionally, higher insurance, benefits and workers compensations expenses weighed on the company's operating expenses, company officials said.

Overall, Albertsons' quarter would have been OK without the strike, said Hugh Sam. But even setting aside the strike, the company still doesn't seem to be getting a handle on its expenses, he said. Meanwhile, the fact that the company had to cut prices in the quarter is a direct result of competition from the likes of Wal-Mart, he added.

"Cost pressure is growing faster than Albertsons' ability to cut costs," Hugh Sam said. "They had to bring prices down in order stay competitive with Wal-Mart."

The other grocery chains are feeling that same pressure. And it's likely to increase as Wal-Mart expands its so-called Supercenters, which add fresh produce and other grocery items to its selection of general merchandise.