Safeway Sees Slight Rise in Second-quarter Earnings

PLEASANTON, Calif. - No. 2 food retailer Safeway Inc. today said second-quarter net earnings rose slightly, as profit growth was hindered by competitors and restructuring costs.

Including $41.1 million in previously announced restructuring and other one-time costs, net income was $309.3 million, or 63 cents per diluted share, up slightly from $307.3 million, or 59 cents per share a year earlier. Results for 2001 include charges related to goodwill.

Income excluding items in the quarter ended June 15 fell to $350.4 million, or 72 cents a diluted share, from $358 million, or 69 cents a year earlier.

Second-quarter 2002 comparable-store sales decreased 0.4 percent, while identical-store sales (which exclude replacement stores) fell 1.1 percent. Sales were impacted by continued softness in the economy, an increase in competitive activity, an overly aggressive shrink effort and disruptions associated with the centralization of buying and merchandising. Total sales increased 1.2 percent to $8.1 billion from $8.0 billion in the second quarter of 2001 primarily because of new store openings.

The company repurchased 5.2 million shares of Safeway common stock at a total purchase price of $225 million in the second quarter of 2002. Safeway's board of directors has increased the authorized level of the company's stock repurchase program to $3.5 billion from $2.5 billion, leaving $1.6 billion available for repurchases under the new authorized level. The timing and volume of future purchases will depend on market conditions.

Safeway said it expects to spend more than $1.9 billion in 2002 while opening approximately 80 new stores and completing approximately 200 remodels.
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