Safeway reports 1st-quarter loss on higher costs, acquisition expenses
PLEASANTON, Calif. (AP) -- Safeway on Wednesday posted a net loss for the first quarter because of higher costs and acquisition expenses.
The grocery-store chain is being acquired by an investment group in a deal worth about $7.64 billion. The deal, which combines Safeway and Albertsons, is expected to close in the fourth quarter.
Safeway and other grocery store operators have been trying to adapt to a changing supermarket industry, with people increasingly doing their shopping at big-box stores like Target, drug stores and even dollar stores. In addition, they must balance between customers' need for low price food and fluctuating food costs.
The company said it lost $76.5 million, or 34 cents per share, in the three months ended March 22. That compares with net income of $118.9 million, or 49 cents per share, a year ago. Excluding one-time items, profit totaled 6 cents per share. Analysts expected adjusted net income of 18 cents per share.
"While sales met plan in the first quarter, income was slightly below plan, in part as a result of inflation in produce, meat and pharmacy that was not fully passed along for competitive reasons," said CEO Robert Edwards. He added that cost cuts should boost profitability in the second half of 2014.
Revenue rose 1 percent to $8.26 billion from $8.18 billion last year. Analysts expected $8.26 billion. Revenue in stores open at least one year, a key retail metric, rose 1.8 percent, excluding fuel. The company said the measure was up about 2 percent in the second quarter.
The company said it is no longer providing a financial outlook because of the pending acquisition.