Safeway's Q1 in line with company's expectations

PLEASANTON, Calif. — Net income for Safeway dropped due to a tax charge and the retailer's decision to repatriate $1.1 billion from its wholly owned Canadian subsidiary, although the company noted revenue rose nearly 5%.

Net income for the first quarter ended March 26 dropped to $25.1 million, or 7 cents per diluted share, compared with $96 million, or 25 cents per diluted share, in first quarter 2010. Excluding the tax charge, Safeway said first-quarter net income was $105.3 million, or 29 cents per diluted share.

Total sales for the retailer increased 4.8% to $9.8 billion in first quarter 2011, compared with $9.3 billion in first quarter 2010. The retailer said that the increase was the result of higher fuel sales, a 0.4% increase in identical-store sales, excluding fuel, and a higher Canadian exchange rate, partly offset by reduced sales due to closed stores.

"Our first-quarter results are in line with our expectations, and we are pleased with our improving sales trends," said Steve Burd, chairman, president and CEO. "Identical-store sales, excluding fuel, improved for the fifth consecutive quarter and are now positive. We are successfully passing cost inflation along at retail while making appropriate price adjustments to remain competitive."

Safeway is reaffirming guidance for the year of $1.45 to $1.65 earnings per diluted share (including the estimated 1 cents per diluted share negative impact from the Canadian dividend).