Safeway Stores Inc

Three big grocery-store chains reached a tentative union contract with 8,900 employees in Northern California, averting a work stoppage. The peaceful climax to contract talks -- a contrast to the stalemate that kept more than 50,000 grocery workers off their jobs in Southern and Central California for 4 1/2 months starting late last year -- could provide a blueprint for ending negotiations that are continuing between stores and about 30,000 union members in the San Francisco area.

Nearly 10 months after the end of the bitter Southern California grocery strike and lockout, the three companies and the union that waged the longest labor standoff in U.S. supermarket history are still in turmoil. Profits at Albertsons Inc., Safeway Inc.'s Vons and Pavilions stores and Kroger Co.'s Ralphs are being pinched by the price cuts they've made to woo shoppers alienated by the 4 1/2 -month dispute.

Safeway Inc. warned Wednesday that lingering effects of the Southern California grocery workers strike and lockout would continue to damp its profit next year. The Pleasanton, Calif.-based operator of 1,815 supermarkets in the United States and Canada said it expected earnings of $1.41 to $1.51 a share for 2005. Analysts had forecast $1.67 a share, according to Thomson First Call.

Safeway Inc. agreed Thursday to pay $245,000 and boost its efforts to curb underage cigarette sales to settle a California lawsuit charging the grocer with selling tobacco to minors. State Atty. Gen. Bill Lockyer said Safeway agreed to a number of new policies, such as checking the identification of any person buying tobacco products who looks younger than 27 years old and using cash registers programmed to prompt checks on all such sales.

Supermarket giant Safeway Inc. named retired General Mills Inc. executive Raymond Viault to its board Wednesday, completing a makeover spurred by shareholders who wanted to be represented by directors with fewer ties to management. Viault, a General Mills vice chairman until his retirement this year, will replace Hector Ley Lopez, who runs a Mexico-based chain in which Safeway owns a 49% interest. The change in the board's composition will become effective Dec. 15. Pleasanton, Calif.

Safeway Inc.'s stock hit a 52-week low Tuesday after the company reported a 21% drop in third-quarter profit because of the lingering effects of last winter's supermarket strike and warned that this slowdown would stretch into next year. Pleasanton, Calif.-based Safeway, the nation's No. 3 grocer, said its net income dropped to $159.2 million, or 35 cents a share, from $202.5 million, or 45 cents, a year ago.

Albertsons Inc., Safeway Inc. and the union representing workers at San Francisco Bay Area supermarkets agreed to keep negotiating past the expiration of their contract tonight. The No. 2 and No. 3 U.S. grocery chains and the United Food and Commercial Workers Union, representing about 30,000 workers in the region, will extend the current contract. Both sides have the option of halting the talks on five days' notice.

Safeway Inc. Chief Executive Steven Burd said Wednesday that its new labor contract in Southern California should lower the pay gap by one-third between it and non-union rivals such as Wal-Mart Stores Inc., helping to free up capital to expand and remodel Safeway's stores.

Safeway Inc., saying its Central and Southern California sales haven't fully recovered from a lengthy strike that ended in February, posted a 4% drop in fiscal second-quarter profit Tuesday. The supermarket company's stock then fell 3%. Although the strike ended before the quarter began, Safeway -- which owns Vons and Pavilions -- said the labor dispute pulled earnings down by $50 million as it cut prices and stepped up promotional spending to woo back customers.

California Atty. Gen. Bill Lockyer sued supermarket giant Safeway Inc. on Wednesday for allegedly selling tobacco products to children or not posting warning signs against underage sales. Lockyer, joined in the suit by Los Angeles City Atty. Rocky Delgadillo, said sting operations found that Safeway-owned stores, including Vons, Pavilions and Pak N' Save stores, had the highest rate of violations of laws designed to prevent teens younger than 18 from smoking.