Sales at Airgas declined sharply in the month of December, prompting the company to lower earnings guidance for its third quarter, ended December 31, 2008.
The company now expects fully diluted earnings per share for its third quarter to be in the region of $0.74 to $0.76, an increase of 10% to 13% over the previous year third quarter earnings of $0.82 to $0.84 per share.
The decline in sales during December was driven by rapidly slowing macro economic conditions and extended shutdowns during the holiday season.
Total same-store sales for the quarter were essentially flat with the previous year, as hardgoods same-store sales contracted while gas and rent same-store sales slowed but remained positive.
The original guidance had assumed mid single-digit total same-store sales growth in the quarter.
Airgas Chairman and CEO Peter McCausland said, “During the quarter we began implementation of expense reduction plans which represent about $35 million in annual savings, over and above the $10 million in annual savings generated by our previously identified operating efficiency programmes.”
He added, “We are prepared to initiate further expense reductions if the low sales volumes we saw in December persist for very long. We will issue fourth quarter guidance with our third quarter earnings release, and should have better visibility on sales and expenses at that time.”
A full review of the company’s third quarter results and outlook for the remainder of fiscal 2009 will be provided during its third quarter earnings teleconference on January 29.