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Safeway may shed gift-card unit

Grocer's stock rises after it says it may sell Blackhawk Network.

March 05, 2008|From Bloomberg News

Shares of Safeway Inc. rose Tuesday after Chief Executive Steve Burd said he might sell or "monetize" part of its Blackhawk Network gift-card unit because it was undervalued.

Burd also reiterated the company's 2008 forecast.

Shares of Pleasanton, Calif.-based Safeway climbed $1.25, or 4.4%, to $29.70, the biggest gain since Jan. 16.

The shares are down 13% this year.

"It was a more confident sales pitch compared to the fourth-quarter earnings call and bullish comments on Blackhawk," said Neil Currie, an analyst at UBS Securities.

Blackhawk sells gift cards from retailers including Nordstrom Inc. and Starbucks Corp. at more than 63,000 kiosks in Safeway and other grocery stores. Burd discussed selling the unit at a Bear Stearns Cos. conference in New York.

"We are determined to get the market to appreciate the underlying value of Blackhawk," Burd said. "If at some point we feel frustrated in that the market's not valuing that, then there would be an effort to monetize a piece of that so that we could get that appreciation."

Burd declined to give a timeline for a decision.

He said he was still confident in Safeway's 2008 earnings forecasts regardless of the state of the economy.

Last month, Safeway reiterated its 2008 projection that per-share earnings would rise to $2.25 to $2.35 this year.

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