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Safeway (SWY) to Withdraw From Chicago by 2014

NEW YORK (TheStreet) -- Supermarket chain Safeway (SWY) announced on Thursday it plans to exit Chicago by 2014. The "disposal" of 72 Safeway-owned Dominick's stores in the area will likely generate a cash tax benefit of between $400 million to $450 million, though this will be countered by a $375 million pension withdrawal liability to be paid over 20 years.

The decision to withdraw from Chicago is consistent with Safeway's strategy to consolidate. In June, Safeway announced it was selling its Canadian operations.

"These actions will allow us to focus on improving and strengthening our core grocery business," said CEO Robert Edwards in a statement on Thursday. "We are continuing to review all of our businesses to optimize our allocation of resources, improve sales and grow operating profits."

For the third-quarter ended September 7, Safeway reported net income of $65.8 million, compared to $157 million in the year-ago quarter. The Dominick's brand netted losses of $13.7 million in the quarter.

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Safeway revised its full-year 2013 earnings guidance to between $1.67 billion to $1.7 billion, lower than its previously forecast $1.7 billion to $1.73 billion.

Shares had gained 2.5% to $31.57 by market close. In after-hours trading Thursday, shares were up 6.4%.

Written by Keris Alison Lahiff.

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