Acquisitions Help Safeway Bag 18% Profit Rise in Quarter
Safeway Inc., the third-largest U.S. supermarket chain, on Thursday said fiscal first-quarter profit rose 18% as acquisitions helped to boost sales.
The stock fell $4.50, about 9%, to close at $45.13 on the New York Stock Exchange. Before Thursday, shares of Safeway had risen about 31% since March 1.
Pleasanton, Calif.-based Safeway, which operates the Vons and Pavilions chains, cut administrative costs for the 28th straight quarter and used its larger size to help negotiate tougher terms with suppliers. Even so, sales at stores open at least a year, excluding replacement stores, rose 1.8%, less than the company’s previous forecast of 1.9% to 2.4%, analysts said.
“People were hoping for more,” said analyst Dan Donovan of American Express, Safeway’s third-largest shareholder with about 22.8 million shares as of December. “It wasn’t a blowout quarter.”
Net income for the quarter ended March 25 rose to $241.9 million, or 48 cents a share, from $205.8 million, or 40 cents, a year ago. Sales rose 16% to $7.1 billion from $6.1 billion, following acquisitions of smaller grocery chains such as Randall’s Food Markets Inc.
Safeway also said it plans to spend more than $1.6 billion this year to open 70 to 75 stores and remodel about 250. It has about 1,663 stores.
Safeway was expected to earn 47 cents, the average estimate of analysts surveyed by First Call/Thomson Financial. The chain trails Kroger Co. and Albertson’s Inc. in sales.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* City National Corp., the Los Angeles-based parent of the 50-branch City National Bank, reported record first-quarter net income of $31.0 million, or 66 cents a share, compared with $26.0 million, or 55 cents, a year ago. Net interest income rose to $92.2 million from $77.7 million.
* East West Bancorp, the San Marino-based parent of East West Bank, reported a 45% rise in first-quarter net income, to a record $8.7 million, or 38 cents a share, compared with $6.0 million, or 26 cents, a year ago. Net interest income rose to $22.0 million from $16.2 million.
* Easyriders Inc., the Agoura Hills-based publisher, retailer and restaurant operator, reported a fourth-quarter net loss for the period ended Dec. 31 of $5.3 million, or 23 cents a share, compared with a loss of $4.9 million, or 26 cents, a year ago. Revenue fell to $10.8 million from $11.5 million.
* Visx Inc., the Santa Clara, Calif.-based maker of eye-surgery lasers, said first-quarter profit fell slightly as its costs and expenses increased and it cut the fee it charged doctors to use its devices. Earnings fell to $19.5 million, or 30 cents a share, from $19.7 million, or 29 cents, a year earlier. It was expected to earn 27 cents. Revenue rose 18% to $63.9 million from $53.9 million.
