Safeway Inc.'s shares dropped Monday after a Credit Suisse analyst downgraded his rating on the grocery chain, saying it may have a larger-than-expected underfunded liability tied to itspension plans that could cause its costs to rise over time.
THE SPARK: Credit Suisse analyst Edward Kelly said that his firm's analysis of Safeway's multi-employer pension plans found a $7 billion pre-tax underfunded liability.
While this doesn't pose a drain on the company's cash flow in the short-term, he said it could also cause labor costs to rise over time. Given the potential rise in costs, Kelly said Safeway's shares are not as cheap as they appear.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
