Third quarter Retail Food net sales were $1.06 billion compared to $1.09 billion last year, a decline of 2.6 percent, primarily reflecting identical store sales of negative 1.9 percent.
Retail Food operating earnings in the third quarter were $24 million, or 2.2 percent of net sales, and included $1 million in pre-tax income related to a reduction of previously accrued severance costs. When adjusted for this item, Retail Food operating earnings in the third quarter were $23 million, or 2.2 percent of net sales. Last year’s Retail Food operating earnings were $17 million, or 1.5 percent of net sales, and included a $10 million pre-tax gain related to a cash settlement from credit card companies partly offset by a $1 million pre-tax asset impairment charge. When adjusted for these items, last year’s Retail Food operating earnings in the third quarter were $8 million, or 0.7 percent of net sales. The increase in Retail Food adjusted operating earnings was primarily driven by the benefit of cost reduction initiatives, including lower depreciation expense.
Third quarter fees received under the TSA were $48 million compared to $10 million last year, reflecting a higher number of stores and distribution centers covered under the agreements and $4 million of the one-year transition fee earned under the TSA. Net Corporate operating loss in the third quarter was $12 million and included a $1 million pre-tax contract breakage charge. When adjusted for this item, net Corporate operating loss in the third quarter was $11 million. Last year’s net Corporate operating loss in the third quarter was $65 million. The reduction in Corporate operating loss was primarily driven by incremental fees received under the TSA, which covered administrative costs remaining in continuing operations, and cost reduction initiatives. Last year’s loss included administrative costs of the disposed operations that were not covered by the previous TSA.