A second-quarter profit increase was not enough to keep Safeway ( SWY) safe.

Shares of the grocer plunged 10% to $18 in pre-market trading after lowering its full-year outlook.

During the quarter, the company earned $239 million, or 57 cents a share, compared with $234 million, or 53 cents, in the year-ago period. Analysts expected earnings of 55 cents.

Results included a tax benefit of 14 cents a share.

Sales declined 6.5% to $9.46 billion, hurt by lower fuel sales and a 1.5% decline in identical-store sales.

The company cut its full-year outlook to a range of $1.70 to $1.90 a share, compared to previous guidance of $2.10 to $2.30 a share.

"Investments in lower prices take time to gain sales traction, Steve Burd, Chairman, President and CEO, said in a statement. "This is particularly true in today's environment where our volume increases are more than offset by price investments, an unprecedented level of deflation in two of our largest categories and trading down. As a result, we anticipate soft identical-store sales for the remainder of the year and have reduced our earnings expectations accordingly."
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