* 3rd-qtr EPS from continuing operations $0.45 vs Street
* Total sales $10.05 billion vs. Street view $10.24 billion
* Shares close down more than 3 percent
Oct 11 Safeway Inc, the second-largest
U.S. supermarket chain, reported quarterly sales that missed
Wall Street's view amid intense competition, and its shares fell
more than 3 percent.
Safeway's sales miss came as it was launching a shopper
loyalty program to attract customers as part of its effort to
reverse volume declines driven by a tepid economic recovery.
Traditional grocers like Safeway and Kroger Co have tough
competition from Wal-Mart Stores Inc and other retailers
and they are fighting for every sale.
The operator of supermarkets such as Safeway, Vons and
Dominick's said third-quarter sales slipped to $10.05 billion
from $10.06 billion a year ago. They were hurt by the loss of
the Genuardi's store sales and a lower Canadian exchange rate,
but partially offset by more gasoline sales.
Analysts, on average, had been expecting sales of $10.24
billion, according to Thomson Reuters I/B/E/S.
Closely watched identical-store sales, excluding fuel, rose
0.1 percent in the third quarter and are up 1 percent in the
current quarter due to "slightly improved volumes and higher
inflation," Safeway said in a statement.
Fiscal third-quarter profit from continuing operations was
$108 million, or 45 cents per share, down from $130.3 million,
or 38 cents per share, a year ago. That topped analysts' average
forecast by 3 cents per share, according to Thomson Reuters
During the quarter, Safeway closed one Genuardi's store and
sold 16 for an after-tax gain of $49 million. Including that
gain, it earned $157 million, or 66 cents per share, in the
quarter ended Sept. 8.
Gross profit declined more than expected to 26.4 percent of
sales from 27.0 percent a year earlier, partly due to costs
associated with rolling out its "Just for U" loyalty program.
Reversing declining volume can be costly and take time, but
grocery stores must do it if they want to deliver healthy
earnings growth. Volume is a measure of physical goods sold by
Safeway's volume performance has lagged that of Wal-Mart,
which sells more groceries than any other U.S. retailer. It has
also trailed behind its larger rival Kroger.
BB&T Capital Markets analyst Andrew Wolf said it appeared
that Safeway's volume trends were improving. Investors should
get a better measure of Safeway's progress when the company
reports financial results from the current fourth quarter, he
"There's not a long time to wait to see if Safeway is
turning the corner or not," said Wolf.
Safeway shares closed down 3.6 percent at $15.71 on the New
York Stock Exchange.