PLEASANTON, Calif. — Safeway here said Thursday higher fuel prices fueled sales and profits during the first fiscal quarter, although one-time charges depleted reported net earnings for the period.
"When fuel prices go up, we have the cheapest price compared with branded companies," Steve Burd, chairman, president and chief executive officer, told analysts during a conference call. "And when you add in promotional programs that reduce the price per gallon, it all works to our advantage."
For the quarter, which ended March 26, net income fell 74% to $25.1 million as the result of a tax charge of $80.2 million related to the previously announced decision to repatriate $1.1 billion from the company's wholly owned Canadian subsidiary. Excluding the charge, adjusted net income was up 9.7% to $105.3 million.
Sales for the quarter increased 4.8% to $9.8 billion, and identical-store sales, excluding fuel, rose 0.4% — the fifth consecutive quarter of ID sales growth, Burd pointed out.
Safeway said the overall sales increase resulted from a combination of higher fuel sales, an increase in the Canadian exchange rate, higher non-fuel-related IDs (up 120 basis points, Burd noted) and a change in the way the chain accounts for its Blackhawk gift-card subsidiary.
