Profits rise at Safeway
Sacramento Business Journal - 10:28 AM PDT Thursday, April 26, 2007

Sales during the first quarter of fiscal 2007 were better than expected at Safeway Inc., leading to a profit of more than $174 million, or 39 cents per diluted share, for the quarter ending March 24.

That was up from nearly $143 million, or 32 cents per diluted share, during the same quarter last year.

Steve Burd, president and chief executive officer of Pleasanton-based Safeway (NYSE: SWY), said Thursday total sales increased 4.8 percent for the quarter, coming in at $9.3 billion, compared with $8.9 billion during the first quarter last year. When fuel sales were excluded, the important same-store sales category saw a 4.5 percent increase during the quarter as compared with the same quarter a year ago.

"This year is off to a good start," Burd said in a statement. "Our sales were better than planned, as investments in lifestyle stores and our marketing and pricing strategies produced good returns. We anticipate continued success as we move through the balance of the year."

Company officials are predicting earnings per diluted share of $1.90 to $2 for fiscal 2007, and free cash flow of between $400 million and $600 million.

The company also said Thursday it had income tax expenses of $103.8 million, or about 37 percent of pretax income, for the first quarter of fiscal 2007.

As part of its extensive remodeling campaign that began two years ago, Safeway spent nearly $386 million on capital expenditures during the first quarter, opening one new lifestyle store, completing lifestyle-store redesigns on 23 others and closing seven stores. For the entire fiscal year, the company predicts it will spend $1.7 billion on capital projects, including the opening of 25 new lifestyle stores and remodels of about 275 other existing locations.

Safeway, which had sales of $40.2 billion during fiscal 2006, now operates 1,755 stores in the United States and Canada. It is the second-largest grocery chain in Greater Sacramento with 32 stores.

East Bay Business Times