Safeway Q3 Profit Declines; Cuts FY13 EPS Outlook - Quick Facts

(RTTNews) - Supermarket chain Safeway Inc. (SWY) posted third-quarter net income attributable to the company of $65.8 million, or $0.27 per share, compared to $157.0 million, or $0.66 per share, a year ago.

Income from continuing operations, net of tax, was $18.5 million or $0.07 per share for the third quarter of 2013 and included an impairment of a warehouse information software project in the amount of $9.9 million, or $6.1 million after tax or $0.03 per share.

Excluding this impairment charge, income from continuing operations, net of tax, was $18.5 million, or $0.07 per share, down from $39.0 million, or $0.16 per share in the comparable quarter last year. On average, fourteen analysts polled by Thomson Reuters expected the company to earn $0.16 per share. Analysts' estimates typically exclude special items.

Sales and other revenue for the latest third quarter were $8.62 billion, up 1.1% from $8.53 billion in the comparable period, while twelve analysts expected revenue of $8.52 billion for the quarter.

Safeway announced that it intends to exit the Chicago market, where it operates 72 Dominick's stores, by early 2014. This will result in a cash tax benefit of $400 million to $450 million which will be available in the short-term to partly offset the cash tax expense on the sale of the net assets of Canada Safeway Limited.

The company expect to use the cash tax benefit and any other cash proceeds from the disposal of Dominick's properties to buy back stock and to invest in growth opportunities.

For 2013, the firm expects adjusted per-share earnings of $0.93 to $1.00 per share, down from its previous range of $1.02 - $1.12, assuming no benefit from the proceeds from the sale of its Canadian operations. Excluding Dominick's operating results, guidance for adjusted, diluted EPS is $1.05 to $1.12.

Analysts currently expect fiscal 2013 earnings of $1.09 per share.