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Safeway Sees 28% Jump in 4th-Quarter Profit

January 25, 2002|From Bloomberg News

Safeway Inc.'s fourth-quarter net income rose 28% as the third-biggest U.S. supermarket chain cut costs.

Net income rose to $384.1 million, or 76 cents a share, from $299.1 million, or 58 cents, a year earlier, the company said. Sales increased 6.7% to $10.7 billion.

Chief Executive Steve Burd has been lowering costs from theft, food spoilage and other factors while boosting sales of more profitable private-label goods. Safeway, whose stores include the Vons chain, also completed its purchase of Genuardi's Family Markets in February and added 95 stores in the last year to help increase sales.

Same-store sales, or sales at stores open at least a year, rose 0.8% from a year earlier, adjusted for the effects of a strike against the operator of its Northern California distribution center in the last quarter of 2000. Without the adjustment, sales rose 2.1%, the company said.

Shares of Pleasanton, Calif.-based Safeway rose 75 cents to $40.55 on the New York Stock Exchange. They have fallen 22% in the last year.

The fourth-quarter results included setting up a reserve for leases assigned in 1987 to Furr's Inc. and Homeland Stores Inc., both of which filed for bankruptcy last year.

Excluding these and other costs, Safeway said profit would have been $409.6 million, or 81 cents a share, meeting the average estimate of analysts surveyed by Thomson Financial/First Call.

Analysts say Safeway may fall short of sales growth forecasts of 3% to 4% over the next five years because of increasing competition. Rivals Albertson's Inc. and Kroger Co. have been reducing prices.

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