Safeway Profit Up 20%, Beating Expectations

Supermarket giant Safeway Inc. on Thursday posted a 20% rise in earnings per share to beat Wall Street estimates, crediting better buying practices, improved product mix and cost-control efforts.

Safeway, one of North America’s largest food and drug retailers, said its net income rose to $280.9 million, or 55 cents a share, for its fiscal second quarter ended June 17 from $236.4 million, or 46 cents, a year earlier.

The results topped the First Call/Thomson Financial consensus estimate of 53 cents.

The Pleasanton-based operator of 1,665 stores in the United States and Canada said its second-quarter sales rose 17% to $7.4 billion from $6.3 billion a year ago because of strong store operations and the acquisition of Houston-based Randall’s in September.

“Our efforts to build sales are clearly producing strong results,” Safeway Chairman Steven Burd said in a statement.

Same-store sales, or sales from stores open at least a year, rose 4.9% in the quarter, the company said.

Safeway shares rose $2.31 to close at $47.94 on the New York Stock Exchange. The stock has a 52-week range of $29.31 to $55.

On Wednesday, Safeway said it had invested about $471 million in capital expenditures during the first two fiscal quarters of this year.

The company opened 25 new stores and closed 19 stores. For the full year, the company said it expects to spend more than $1.7 billion while opening 75 to 80 new stores and completing about 275 remodelings.