Tags: Safeway | Shares | Rally | Profit

Safeway Shares Rally After Profit Tops Estimates

Thursday, 21 Feb 2013 03:38 PM

 

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Shares of Safeway Inc. advanced the most ever after the second-largest U.S. grocery chain reported fourth-quarter profit that exceeded analysts’ estimates on higher stores sales.

In the last half-hour of trading Thursday in New York, the shares were up 15 percent at $23.08, after increasing as much as 19 percent for the biggest intraday gain since the company’s 1990 initial public offering.

Safeway is working to compete with big-box retailers such as Wal-Mart Stores Inc. with its grocery and fuel loyalty programs. Last month, Safeway announced Chief Executive Officer Steven Burd will retire in May after 20 years at the company. A replacement hasn’t been announced.

Net income in the quarter ended Dec. 29 rose 13 percent to $244 million, or $1.02 a share, from $215.6 million, or 67 cents, a year earlier, the Pleasanton, California-based company said in a statement Thursday. Excluding gains from legal settlements profit was 94 cents a share. Analysts estimated 76 cents, the average of 19 projections compiled by Bloomberg.

Revenue increased 1.2 percent to $13.8 billion, helped by higher gift and prepaid card sales and an 0.8 percent gain in identical-store sales, excluding fuel.

Safeway had advanced 11 percent this year through Wednesday, compared with a gain of less than 1 percent for the Standard & Poor’s 500 Food Retail Index.

The company has about 1,640 stores in the U.S. and Canada. Kroger Co. is the biggest U.S. grocery-store chain.

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