Safeway (SWY) posted stronger-than-expected third-quarter earnings on Thursday but revealed a larger decline in sales on weak foreign-exchange rates and inflation.
The Pleasanton, Calif.-based company reported net income of $157 million, 66 cents a share, compared with a year-earlier $130.2 million, or 38 cents. Excluding one-time items, Safeway earned 45 cents, ahead of average analyst estimates of 42 cents in a Thomson Reuters poll.
However, revenue for the three months ended Sept 8 was $10.05 billion, down narrowly from $10.06 billion a year ago, missing the Street’s view of $10.24 billion.
Shares of Safeway fell more than 7% to $15.15 Thursday morning.
The food and drug retailer blamed the decline on the sale of the remaining Genuardi’s stores, higher inflation and a lower Canadian exchange rate, partially offset by higher incremental sales driven by its loyalty program.
Same-store sales grew by a lower-than-expected 0.1% during the quarter.
Looking ahead, Safeway reaffirmed fiscal 2012 earnings in the range of $1.90 to $2.10 a share, bracketing the consensus’ $1.98.