Safeway Profit Declines On Charges - Update

(RTTNews) - Supermarket chain Safeway Inc. (SWY), Thursday reported a lower second-quarter profit, hurt by one-time charges, including tax expenses from the sale of its Canadian operations. Excluding items, adjusted earnings for the quarter came in line with Wall Street estimates.

Shares of the food and drug retailer were up 5 percent on the New York Stock Exchange.

Pleasanton, California-based Safeway posted second-quarter net earnings of $8.4 million or $0.03 per share, down from $122.7 million or $0.51 per share last year.

Results for the quarter comprised a loss from discontinued operations of $49 million, including a tax charge of $106.7 million on Canada Safeway Limited's retained earnings. In June, Safeway agreed to sell its Canadian division to Canada-based grocery retail giant Sobeys Inc. for C$5.8 billion.

Also included in the quarter are legal reserves of $17 million, and IPO-related costs of $5.7 million for its gift card distribution network, Blackhawk Network Holdings Inc. (HAWK).

Excluding items, adjusted earnings for the quarter were $125.1 million or $0.51 per share.

On average, 13 analysts polled by Thomson Reuters estimated earnings of $0.51 a share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter edged down 1.6 percent to $8.7 billion from $8.8 billion in the prior year.

Gross margin grew 29 basis points to 26.23 percent in the quarter. Excluding the 32 basis-point impact from fuel sales, margins fell three basis points.

For fiscal year 2013, Safeway now expect adjusted earnings in the range of $1.02 to $1.12 per share, excluding discontinued operations -- Canada Safeway Limited.

The company had previously projected earnings guidance in the range of $2.25 to $2.45 per share.

The company's stock is trading at $26.03, up $1.39 or 5.62%, on a volume of 7.3 million shares.