Shares of American Stores Co., parent of Jewel Foods Stores, fell $3.12, to $79.62, on the New York Stock Exchange Tuesday after Oppenheimer & Co. removed the stock from its recommended list.
The securities firm cited a possible decline in operating earnings for the huge supermarket firm, as the nationwide economic downturn cuts into sales.
Oppenheimer analyst Edward Comeau cut his investment rating on the company to ”market performer” from ”buy.” Oppenheimer also removed the shares of the Salt Lake City-based company from its recommended list.
The stock`s opening was delayed for an order imbalance.
Comeau said he wasn`t recommending sale of the stock. He expects earnings growth to be 15 to 20 percent for this year, but most of that will be the result of debt reduction and lower interest expenses. And that prospect is factored into the stock price, he said.
Recent same-store sales at its 420-store Lucky Stores division were off 2 percent, and operating profits are down 5 to 8 percent, reflecting economic weakness in California, said Comeau. The decline in same-store results also points up Lucky`s lack of an aggressive store development program, which has cost it market share to Vons Cos., he said.
Sales were up slightly at the Jewel division here and at Acme Stores in the east, Comeau said. And the Osco Drug Store division is showing a sales gain of about 10 percent, he added.
Same-store sales at the 75-outlet Skaggs Alpha Beta division in Dallas are also down slightly, around 1 percent, in the quarter, he said and could weaken more with the planned entry of Food Lion stores there soon.
