Safeway sees 3Q income drops

PLEASANTON, Calif. Safeway reported net income of $128.8 million (31 cents per diluted share) for the third quarter of 2009 compared with net income of $199.7 million (46 cents per diluted share) for the third quarter of 2008.

“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.”

Total sales declined 7% to $9.5 billion in the third quarter of 2009 compared with $10.2 billion in the third quarter of 2008. This decline was the result of lower fuel sales (which was due primarily to lower fuel prices), a 3% decline in identical-store sales for the quarter, excluding fuel, and a decline in the Canadian exchange rate.

Safeway is maintaining earnings guidance for the year 2009 of $1.70 to  $1.90 per diluted share. Safeway is also maintaining free cash flow guidance for the year 2009 of $1.1 billion to $1.3 billion.