Safeway Posts Earnings Drop of More Than 40% - TheStreet

Safeway Posts Earnings Drop of More Than 40%

The grocery chain misses estimates and lowers full-year guidance.
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Safeway (SWY) shares sold off on Thursday after the company's dismal earnings report.

The grocery chain reported that its second-quarter earnings fell nearly 43% on a per share basis. Even excluding discontinued operations, the company's results missed its own guidance and Wall Street's projections. Meanwhile, the company lowered its full-year guidance and warned that third-quarter results may not meet analysts' expectations.

In response, Safeway shares closed down 56 cents, or 2.7%, to $19.98.

For the quarter ended June 14, Safeway earned $161 million, or 36 cents a share, on $7.74 billion in sales. The earnings were off the company's results from the year-ago quarter, when it earned $309.3 million, or 63 cents a share, on revenue of $7.51 billion.

Excluding the results of the company's Chicago-based Dominick's chain, which Safeway plans to sell, the company earned $199.6 million, or 45 cents a share. That compares to the earnings of $305 million, or 62 cents a share, a year ago the company would have posted without the discontinued operation.

Analysts surveyed by Thomson First Call were expecting Safeway to earn 47 cents a share on $7.59 billion in sales on this basis. The Pleasanton, Calif.-based company previously had projected that it would earn 47 cents to 49 cents per share in the just-completed quarter.

For the third quarter, Safeway expects to earn 47 cents to 50 cents per share. Wall Street had projected that the company would earn 50 cents in the current quarter, according to Thomson First Call.

Safeway now expects to earn $2.13 a share for its full 2003 fiscal year. Although that figure agrees with analysts' current projections, it falls short of the company's previous guidance. The company previously estimated it would earn $2.20 to $2.25 per share for the full year.