Safeway Q1 Profits Down, But Outlook Still Positive

As chairman and CEO Steve Burd warned last month, Pleasanton, Calif.-based Safeway saw a drop in profits for the first quarter of 2010, but he said he expects growth later this year.
“Our first-quarter results were in line with our expectations, and we are reaffirming our earnings-per-share guidance for 2010 of $1.65 to $1.85,” said Burd. “We are encouraged by our volume trends in the first quarter of 2010 compared to the fourth quarter of 2009, and the trends have improved in the second quarter of 2010. We believe we will continue to see positive trends in the second half of the year as the economy improves, deflation subsides and consumer confidence builds.”
The grocer reported net income for the quarter of $96 million, or 25 cents per share, down from $144.2 million or 34 cents per share, last year. Total sales for the quarter increased to $9.3 billion from $9.2 billion in 2009. This increase was the result of a higher Canadian exchange rate and higher fuel sales, and partly offset by a 3.1 percent decline in identical-store sales, excluding fuel.
Safeway reaffirmed its guidance for the year of $1.65 to $1.85 earnings per share, and non-fuel identical-store sales growth of flat to 1 percent.
The company invested $192.6 million in capital expenditures in the first quarter of 2010, completing nine Lifestyle remodels and closing 13 stores. For the year, Safeway plans to invest up to $1 billion in capital expenditures, open 20 new Lifestyle stores and complete 80 Lifestyle remodels.
Safeway operates 1,712 stores in the United States and Canada.
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