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TheStreet Open House

Roundy’s, Inc. Reports Fourth Quarter And Full Year 2012 Financial Results

Stocks in this article: RNDY

Gross profit for the fourth quarter of 2012 increased 2.1% to $259.5 million, from $254.1 million in the same period last year. Gross profit as a percentage of net sales was 26.4% for the fourth quarter of 2012, compared to 26.2% in the same period last year. The increase in gross profit as a percentage of net sales primarily reflects reduced LIFO expense and an increased perishable sales mix, partially offset by greater price and promotional investments in certain markets and increased shrink.

Operating and administrative expenses for the fourth quarter of 2012 increased to $232.3 million, from $223.1 in the same period last year. Operating and administrative expenses as a percentage of net sales increased to 23.7% in the fourth quarter of 2012, from 23.0% in the same period last year, due to increased occupancy costs related to new and replacement stores, a non-recurring pension withdrawal charge of $1.0 million, incremental costs related to being a public company and reduced labor and fixed cost leverage in the Company’s core business resulting from lower same-store sales.

During the fourth quarter, the Company’s market capitalization experienced a significant decline. As a result, management believed that there were circumstances evident which indicated that the fair value of the Company’s reporting unit could be below its carrying amount. Management therefore updated its annual review of goodwill for impairment that had been completed in the third quarter, and concluded that the carrying amount of goodwill exceeded its estimated fair value, resulting in a pre-tax, non-cash goodwill impairment charge of $120.8 million ($106.4 million after-tax). The non-cash impairment charge will not affect the Company's liquidity, operating cash flows or compliance with debt covenants.

For the fourth quarter of 2012, adjusted net income was $8.6 million, or $0.19 adjusted diluted earnings per common share, compared to $9.2 million, or $0.30 adjusted diluted earnings per common share, for the fourth quarter of 2011. Adjusted net income for the fourth quarter of 2012 excludes a $106.4 million after-tax goodwill impairment charge, or $2.37 per diluted common share, and a $0.6 million after-tax charge, or $0.01 per diluted common share, for the non-recurring pension withdrawal charge, as discussed above. Reported net loss for the fourth quarter of 2012 was $98.4 million, or $2.19 loss per diluted common share.

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