CSFB Cuts Supermarket Estimates
Credit Suisse First Boston lowered its estimates on three supermarket chains Thursday, citing a competitive environment and rising wage and benefit costs.
CSFB pared its full-year earnings estimates for
Alberston's
(ABS)
,
Winn-Dixie
(WIN) - Get Windstream Holdings, Inc. Report
and
Kroger's
.
Albertson's 2002 profit forecast was reduced to $1.97 a share from $2.15 a share, with a 12-month price target of $17. As for Winn-Dixie, CSFB lowered its full-year outlook to $1.38 a share from $1.43 a share, with a price target of $12. CSFB lowered its 2002 outlook on
Kroger's
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to $1.64 a share from $1.66 a share. For fiscal 2003, the firm lowered its EPS estimate to $1.65 from $1.80. The firm also reduced Kroger's price target to $15 from $17.
"Safeway's recent analyst meeting highlighted two major issues for 2003 -- increased price and promotional pressure and increasing wage and benefit costs," analyst Jack Murphy wrote in a research note. "We believe that our previous estimates for 2003 had not yet fully reflected the increased pressures from these sources."
The move comes on the heels of a recent move to slash estimates on three other supermarkets the firm covers, including
Safeway
(SWY)
,
Pathmark
( PTMK) and
A&P
( GAP).
"With this momentum toward increased price competition, it is difficult to make a definitive forecast on where gross margins may bottom in 2003," Murphy noted.
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