PLEASANTON, Calif. -- Higher fuel sales and a slight increase in identical-store sales helped Safeway meet its expectations for the first quarter of 2011.
Safeway reported net income of $25.1 million, or 7 cents per diluted share for the first quarter of 2011, compared with net income of $96 million or 25 cents per diluted share for first quarter of 2010. According to Safeway, its lower net income included an $80.2 million tax charge (22 cents per diluted share) resulting from the previously announced decision to repatriate $1.1 billion from Safeway's wholly-owned Canadian subsidiary. Excluding this tax charge, net income was $105.3 million, or 29 cents per diluted share, for the first quarter of 2011. This was slightly above analysts expectations for earnings of 24 cents per share.
"Our first quarter results are in line with our expectations, and we are pleased with our improving sales trends," said Steve Burd, chairman, president and CEO. "Identical-store sales, excluding fuel, improved for the fifth consecutive quarter and are now positive. We are successfully passing cost inflation along at retail, while making appropriate price adjustments to remain competitive."
The company reported that total sales increased 4.8% to $9.8 billion in the first quarter of 2011 compared with $9.3 billion in the first quarter of 2010. According to Safeway, this increase was the result of higher fuel sales, a 0.4% increase in identical-store sales, excluding fuel, and a higher Canadian exchange rate, partly offset by reduced sales due to closed stores.
Safeway said it is reaffirming guidance for the year of $1.45 to $1.65 earnings per diluted share (including the estimated 15 cents per diluted share negative impact from the Canadian dividend), non-fuel ID sales growth of 1% to 1.5%, operating profit margin change of flat to slightly positive and free cash flow of $0.75 billion to $0.85 billion.