Sales continued, “We recently completed our price repositioning at Jewel-Osco and are pleased with the initial results. Price is only one part of an overall plan to build traffic and drive customer engagement. However, as we measure these results, we are also assessing our on-going approach to price investments, our value proposition and how we go to market. As such, the timing of repositioning half our stores will extend past the end of fiscal 2013. At the same time, we are moving quickly on initiatives that will remove significant cost from our business, efforts that will make us more competitive in the future. And, although we have much to do, I am encouraged every day by the quality of our team members and their commitment to our success.”
“I am pleased that the Company continues to generate substantial cash flow. Year-to-date, we have generated more than $400 million in cash flow from operations and, including the proceeds from asset sales, will generate between $900 and $950 million in fiscal 2013. We will use this to reduce our outstanding debt and keep our stores fresh and appealing,” concluded Sales.
Second Quarter Results
Second quarter net sales were $8.0 billion compared to $8.4 billion last year, a decline of 4.6 percent. The decrease in net sales primarily reflects both a decline in identical store sales and the disposition of a majority of the Company’s retail fuel centers which contributed $158 million in sales in the second quarter of fiscal 2012. Identical store sales were influenced by the stressed consumer, the competitive environment, and continued investment in achieving competitive pricing.Gross profit margin for the second quarter was $1.72 billion, or 21.4 percent of net sales, compared to $1.87 billion or 22.2 percent of net sales last year. The decrease in gross margin as a percent of net sales reflects the negative rate impact from additional promotional activity, an increased level of continued investment in competitive pricing, and a change in business mix which was partially offset by the rate benefit from lower fuel sales (approximately 30 basis points) and a lower LIFO charge.