(Adds details from conference call, background, updates
By Lisa Baertlein
Feb 21 Safeway Inc said Thursday a new
personalized discount program boosted sales in the first quarter
of 2013 compared with the fourth quarter, sending shares up
nearly 14 percent on the New York Stock Exchange.
The second-largest U.S. supermarket chain, which operates
the Safeway, Vons and Dominick's supermarkets, also reported
stronger-than-expected fourth-quarter profit and said it saw no
impact from a recent U.S. payroll-tax hike, which had eaten into
the take-home pay of many shoppers.
Investors had been looking for signs of progress from
Safeway, which has been working to attract customers and boost
sales amid tough competition from traditional grocers such as
Kroger Co and discount retailers ranging from Wal-Mart
Stores Inc to dollar stores.
If trends hold for the remainder of the week, Safeway's
identical-store sales will be up 2 percent for the initial eight
weeks of the first quarter of 2013, Steve Burd, Safeway's
chairman and chief executive, said on a conference call with
Safeway's identical-store sales were up 0.8 percent,
excluding fuel, in the fourth quarter.
At Safeway, that closely-watched measure includes results
from established supermarkets that have not been replaced or
The company's shares were up 13.5 percent at $22.84 in
afternoon trading on the New York Stock Exchange.
While some retailers and restaurants have attributed
softening sales to a hike in payroll taxes that came into effect
on Jan. 1, curbing spending by some consumers, Safeway saw no
such impact, Burd said.
"We cannot see any blip in our numbers as a result of the
payroll tax kicking in," he said.
Like many of its rivals, Safeway has a club card membership
program that gives shoppers discounts on groceries and points
for purchases. Those points can be redeemed for discounts on
The company recently debuted a new personalized shopper
program called "Just for U." It tailors deals for members, based
on their tastes and shopping habits.
Burd said 5.4 million households had signed up for "Just for
U," which insulated the company from any payroll tax hit and
helped boost sales.
"Keep in mind that a 'Just for U' user can save anywhere
from 10 percent to 20 percent off a normal club card pricing,"
said Burd, who will retire at the company's annual meeting on
Safeway's income grew more than 13 percent to $244 million,
or $1.06 per share, in the fourth quarter through Dec. 29.
Excluding gains from legal settlements, the company earned
94 cents per share in the fourth quarter, handily beating
analysts' average target of 76 cents per share, according to
Thomson Reuters I/B/E/S.
Stock buybacks, net of incremental interest expense,
increased earnings per share by 17 cents in the quarter.
Quarterly sales rose to $13.77 billion from $13.60 billion a
Safeway shares have been boosted by speculation that the
company could sell or spin off its Canada operations.
Adding to that speculation, Loblaw, Canada's largest grocer,
said in December it planned to put the vast majority of its
property assets into a real estate investment trust.
Executives said they would discuss real estate and issue
full-year forecasts at its annual investor conference March 6.
(Reporting by Lisa Baertlein in Los Angeles; Editing by Jeffrey
Benkoe and Bernadette Baum)