Safeway profit edges up, sales dip in Q2

Pleasanton, Calif. Safeway reported second-quarter 2009 results early Thursday, which showed net income of $238.6 million compared to $234.3 million for the year-ago period. Second-quarter earnings included a $57.8 million tax benefit from the resolution of a tax matter.

Total sales declined 6.5% to $9.5 billion in the second quarter compared to $10.1 billion a year ago. The company attributed the decline to lower fuel sales on lowered fuel prices, a decline in the Canadian exchange rate and a 1.5% decline in same-store sales for the quarter, excluding fuel. Adjusting for the weeks affected by the shift in Easter holiday sales, same-store sales declined 2.2%, excluding fuel, for the quarter.

“In this challenging economic environment, we continue to focus on providing our customers with greater value by lowering everyday prices on items people buy most often and offering high-quality private-label brands,” said Steve Burd, chairman, president and CEO.

Burd added that he anticipates same-store sales to continue to be soft for the remainder of 2009 and “have reduced our earnings expectations accordingly. Nonetheless, our free cash flow expectations have not changed, giving us significant financial flexibility.”

Safeway invested $202.1 million in capital expenditures in the quarter, opening one new Lifestyle store, completing 36 Lifestyle remodels and closing three stores.

For the year, the company said it expects to spend approximately $1.0 billion in capital expenditures, open about 10 new Lifestyle stores and complete approximately 90 Lifestyle remodels.