PLEASANTON, Calif. — Safeway here said the disposition of its Genuardi's operation in the Philadelphia area and a lower Canadian exchange rate resulted in a sales decline for the third quarter ended Sept. 8.
Safeway sold 16 Genuardi's units and closed one during the quarter for a $49 million after-tax gain and cash proceeds of $111 million. The company said it expects to close the three remaining Genuardi's stores in the fourth quarter for an estimated loss of $11 million.
Net income for the 12-week quarter jumped 20.6% to $157 million, while sales declined 0.2% to $10.1 billion and identical-store sales, excluding fuel, were 0.1% — softer than expected, the company said, due primarily to a decline in price inflation. For the year to date, net income rose 17.1% to $352.5 million, sales rose 1.4% to $30.4 billion and iDs rose 0.3%.
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Steve Burd, chairman and chief executive officer, said an increase in the number of generic prescription sales lowered total IDs by 0.7% during the quarter.
He said fourth-quarter ID sales, excluding fuel, are running at 1% — and at 1.4% in U.S. markets — "with slightly improved volumes and higher inflation than in the third quarter." He expects IDs through the fourth quarter to be driven by increased activity in Just for U, which currently has 4.5 million registrants, representing about 40% of total sales, with between 1.1 million and 1.2 million regular users; the rollout of Safeway's fuel partnership loyalty program with Chevron, which will add close to 900 fuel stations; and the chain's wellness initiative, which will launch in one or two unspecified markets during the quarter, though Burd declined to elaborate.
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