Safeway sales improve, saw no hit from higher payroll tax

LOS ANGELES, Feb 21 (Reuters) - Supermarket operator Safeway Inc on Thursday said store sales have strengthened from the previous quarter and it has seen no impact from higher payroll taxes, which have cut take-home pay for many shoppers.

If trends hold for the remainder of the week, Safeway's identical-store sales will be up 2 percent for the first eight weeks of the quarter, Steve Burd, Safeway's chairman and chief executive, said on a conference call with analysts.

Safeway's identical-store sales were up 0.8 percent, excluding fuel, for the fourth quarter.

At Safeway, that closely-watched measure includes results from established supermarkets that have not been replaced or significantly renovated.

While some retailers and restaurants have attributed softening sales to the Jan. 1 expiration of a 2 percentage point cut in payroll taxes, Safeway saw no impact, Burd said.

"We can't really see any decline that resulted from the payroll tax going up," Burd said.