Cost Containment Drives Lift in Safeway’s First Quarter Sales, Profits

While identical-store sales were flat, cost controls helped boost Safeway’s profits, and higher fuel sales, revenue from its Blackhawk subsidiary, and additional sales from new stores drove a 2.4 percent sales increase to $10.0 billion for its first quarter of 2012 – up from $9.8 billion last year.

"Strong cost controls helped us meet earnings expectations despite a shift in the New Year's holiday, weather patterns and high gasoline prices which dampened sales," said Steve Burd, chairman and CEO. "In addition, operating profit in the quarter would have been essentially the same as last year without the holiday shift. In the last eight weeks, identical-store sales have been running at 1 percent, and we continue to believe sales will grow as our new marketing initiatives take hold."

Safeway reported profits of $81.6 million (30 cents a share) for the first quarter, up from $25.1 million (7 cents per share) last year.

During the quarter Safeway sold 16 Genuardi's stores to Giant Food Stores, LLC, closed three Genuardi's stores and expects to complete the disposition of the remaining 24 Genuardi's stores in 2012 for an estimated gain of approximately $67 million and net cash proceeds of approximately $102 million.

Safeway invested $308.4 million in capital expenditures in the first quarter of 2012, while opening four new Lifestyle stores and closing seven stores. For the year, Safeway expects to invest approximately $900 million in capital expenditures, open 10 new Lifestyle stores and complete 10 Lifestyle remodels.

Pleasanton, Calif.-based Safeway operates 1,675 stores in the United States and Canada.