UPDATE 1-Safeway 4th-qtr profit rises, shares jump
Feb 21 (Reuters) - Safeway Inc, the second largest U.S. supermarket chain, reported higher-than-expected profit on Thursday, helped by new shopper loyalty programs, sending its stock up nearly 6 percent.
Investors had been looking for signs of progress from Safeway, which started grocery and gasoline loyalty programs to attract customers and boost sales amid tough competition from traditional grocers such as Kroger Co and discount retailers ranging from Wal-Mart Stores Inc to dollar stores.
The company, which operates the Safeway, Vons and Dominick's chains, said fourth-quarter operating income rose to $244 million, or $1.06 per share, from $215.6 million, or 67 cents per share, a year earlier.
Excluding gains from legal settlements, the company earned 94 cents per share in the latest quarter, handily beating analysts' average target of 76 cents per share, according to Thomson Reuters I/B/E/S.
Stock buybacks, net of incremental interest expense, increased earnings per share by 17 cents in the quarter.
Quarterly sales rose to $13.77 billion from $13.60 billion a year ago. Closely watched identical-store sales, excluding fuel, were up 0.8 percent, slightly better than the 0.5 percent gain analysts expected.
Gross profit declined 21 basis points to 26.5 percent of sales, as expected, primarily due to Safeway's efforts to lower prices. Excluding fuel sales and fuel partner discounts, gross profit was down 11 basis points.
Safeway shares jumped 5.8 percent at $21.30.