Safeway Inc.'s fiscal third-quarter profit rose 6 percent as the grocery chain generated stronger revenue in part from increased gasoline sales and cost control efforts.
The results beat Wall Street expectations, and its shares rose almost 4 percent in morning trading Thursday.
"Our sales momentum continued to build in the third quarter, and our costs were well controlled," Chairman, President and CEO Steve Burd said in a statement.
The operator of Von's, Dominicks, Safeway and other grocery chains also reaffirmed its full-year earnings forecast and guidance for revenue at stores open at least a year.
The Pleasanton, Calif., company reported net income of $130.2 million, or 38 cents per share, for the period ended Sept. 10. That's up from $122.8 million, or 33 cents per share, a year ago.
Revenue climbed 7 percent to $10.06 billion from $9.4 billion on increased fuel sales, an uptick in a key revenue metric, a higher Canadian exchange rate and a change in reporting gift card commissions.
Revenue at stores open at least a year increased 1.5 percent, when excluding fuel.
This figure is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.
The results topped analysts' average expectations for earnings of 35 cents per share on revenue of $9.85 billion, according to a survey by FactSet.
Safeway's stock rose 68 cents, or 3.8 percent, to $18.65 in morning trading. The shares have traded in a range of $15.93 to $25.43 over the past year.
Safeway still expects full-year earnings between $1.45 and $1.65 per share and revenue at stores open at least a year to be up about 1 percent when removing fuel.
Analysts predict full-year earnings of $1.66 per share.
Safeway runs 1,681 stores in the United States and Canada.
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