Safeway profit down 9 percent

Associated Press

PLEASANTON, Calif. — Safeway Inc. reported a 9 percent drop in its fiscal third-quarter profit, reflecting lackluster sales growth and its continuing struggle with soft economic conditions.

The Pleasanton-based grocery store chain said yesterday that net income came to $281.3 million, or 60 cents a share, for the quarter ended Sept. 7, compared with $309.2 million, or 60 cents a share, a year earlier.

In June, Steven A. Burd, Safeway chairman and chief executive, told analysts the company expected third-quarter earnings of 60 to 62 cents a share. At that time, analysts had expected earnings of 75 cents a share.

Last year's results included $32.7 million, or six cents a share, for goodwill amortization, which is no longer required under new accounting rules.

Sales edged up 1.2 percent to $8.06 billion from $7.96 billion a year earlier, thanks mainly to new store openings. Sales at stores open at least a year, however, slipped 0.7 percent because of ongoing economic weakness.

During the quarter, the company repurchased 32.9 million shares of its common stock at a total purchase price of $918 million.

Safeway said it is comfortable with analysts' expectations of 84 cents a share for its fourth quarter. In the year-earlier period, the company posted earnings, before items, of $409.6 million, or 81 cents a share.

Shares of Safeway closed at $23.50 yesterday on the New York Stock Exchange, up $2.19.