Safeway 4th Quarter Profit Beats Estimates; Shares Rise
PLEASANTON, Calif. (AP) -- Safeway Inc. returned to a profit in the fourth quarter as price cuts and private label products helped boost the national grocery chain's overall performance.
The results beat Wall Street estimates, and its shares rose 5 cents to $22.10 in morning trading Thursday after rising as high as $22.90 earlier in the session. Over the past year, the stock has traded between $18.73 and $27.04.
Safeway, like others in the sector, has looked to trim prices to lure shoppers, yet keep them high enough to still make a profit. While it competes against traditional supermarkets, its rivals also include discounter retailers like Wal-Mart Stores Inc. and Target Corp., which are increasingly putting more emphasis on grocery items.
Safeway reported net income of $229.6 million, or 62 cents per share, for the three months ended Jan. 1. A year earlier it lost $1.61 billion, or $4.06 per share, on a hefty charge for the reduced value of its assets. The goodwill impairment charge totaled $4.59 per share.
Safeway's latest performance surpassed the 58 cents per share forecast of analysts surveyed by FactSet.
Revenue edged up 1 percent to $12.8 billion from $12.69 billion. That tops Wall Street's estimate of $12.45 billion.
"We are pleased with the improving trends in sales in 2010, driven by our price reductions, reinvigorated private label brands and targeted marketing. These trends have continued into the first quarter of 2011," Chairman, President and CEO Steve Burd said in a statement.
Safeway said its quarterly revenue was helped by better fuel sales and an increase in the Canadian exchange rate, but that those factors were offset by lower sales due to store closings and a 0.8 percent drop in revenue from stores open at least a year, excluding fuel.
Revenue from stores open at least a year is a key gauge of a company's health because it measures results at existing stores instead of newly opened ones.
For the full year, Safeway reported net income of $589.8 million, or $1.55 per share. It lost $1.1 billion, or $2.66 per share, in the previous year.
Annual revenue climbed 1 percent to $41.05 billion from $40.85 billion.
The company said it will provide its 2011 earnings outlook on March 8 at its annual investor conference.
Safeway has 1,694 stores in the U.S. and Canada, including chains such as Vons stores in California and Nevada, Randalls and Tom Thumb in Texas, Genuardi's in Philadelphia and Carrs in Alaska.
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