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Safeway Reports 6 Percent Drop In 2nd-Quarter Profit, Blames Anemic Economy

July 7, 1992

OAKLAND, Calif. (AP) _ Safeway Inc. on Tuesday blamed a listless economy and low food prices for a 6 percent drop in profit during the second quarter.

The company, one of the world’s largest food retailers, earned $33.3 million for the three months ended June 13, compared to $35.6 million for the second quarter of last year. Per-share income fell to 28 cents from 31 cents.

Sales dropped 2 percent, to $3.45 billion from $3.52 billion.

″Continued sluggishness in the economy and low overall food price inflation have hampered operating results in the first half of 1992,″ said Peter A. Magowan, Safeway’s chairman, president and chief executive officer.

Safeway also said increased competition held back sales growth for the company and the industry. Also affecting its results were economic conditions in many Canadian markets and a decline in foreign exchange rates.

The results also reflected the chain’s strong performance in the second quarter of 1991, before the recession hit many of its markets, Safeway said.

For the first six months of 1992, Safeway earned $56.2 million, down nearly 10 percent from $62.3 million in the first half of 1991. Per-share income fell almost 18 percent, to 47 cents from 57 cents.

First-half 1992 results were before an extraordinary loss of $27.8 million related to the early retirement of debt from the 1986 leveraged buyout of Safeway. The company returned to public ownership in 1990.

Sales for the first two quarters of the year were $6.84 billion, down 1 percent from $6.92 billion in the first half of 1991.

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