Safeway earnings drop in Q3

Pleasanton, Calif. Safeway said Thursday that net income for third quarter 2009 dropped to $128.8 million compared with net income of $199.7 million in the year-ago period.

Total sales declined 7.0% to $9.5 billion in the third quarter, attributed to lower fuel sales, a 3.0% drop in same-store sales (excluding fuel) and a decline in the Canadian exchange rate.

“Safeway’s sales remained soft, driven largely by deflation in dairy, produce and meat, and a sluggish economy,” said Steve Burd, chairman, president and CEO. “However, we are encouraged that our household and transaction counts increased in the quarter, and that volume trends continue to improve. In addition, our year-to-date free cash flow of $865 million is up $366 million, or 73%, over last year.”

Burd added that the company is working to lower costs in the difficult economy.

Safeway invested $157.2 million in capital expenditures in the third quarter, opening five new Lifestyle stores, completing 16 Lifestyle remodels and closing 10 stores.

During the first 36 weeks of 2009, the retailer invested $602.8 million in capital expenditures, opened seven new Lifestyle stores, completed 62 Lifestyle remodels and closed 16 stores.

For the year, the company said it expects to spend approximately $1 billion in capital expenditures, open about 10 new Lifestyle stores and complete approximately 85 Lifestyle remodels.