Safeway tops expectations; profit up 11%

Supermarket operator Safeway Inc. reported Thursday that its profit rose 11% in the first quarter amid slowing sales growth, results that were boosted by the Easter holiday, a weak dollar and higher gasoline sales.

The company said it earned $193.4 million, or 44 cents a share, for the January-March period, up from $174.4 million, or 39 cents, a year earlier. Revenue rose 7% to $10 billion.

Analysts surveyed by Thomson Financial expected a profit of 42 cents a share on revenue of $9.72 billion.

Safeway said identical-store sales, or sales in stores open at least one year, rose 4.5%, or 2.9% excluding fuel. But adjusting for revenue from Easter, which was in the second quarter last year, those sales rose only 2%. Identical-store sales are a closely watched benchmark for retailers.

The latest measure continues Safeway’s decelerating growth pace amid decreased consumer spending nationwide. Same-store sales grew 2.7% last quarter, the lowest growth rate in nearly two years.

Safeway said it was lowering its expectations for identical-store sales growth for the full year, excluding fuel, to 2% to 2.3%, down from previous estimates of 3% to 3.2%.

The company maintained its guidance for the full year and expects earnings per share of $2.25 to $2.35.

Shares of Pleasanton, Calif.-based Safeway rose $1.14, or 4.1%, to $29.23.