Safeway posts loss
of $1 billion

By Michael Liedke
Associated Press

SAN FRANCISCO >> Slumping supermarket giant Safeway Inc. reported a fourth-quarter loss of $1.05 billion today, reflecting the grocer's continuing headaches with two rotting acquisitions in Texas and Illinois.

The loss of $2.37 per share contrasted with a profit of $353.6 million, or 70 cents per share, during the same time in the previous year.

Safeway has 15 stores in Hawaii, including nine on Oahu, three on Maui, two on the Big Island and one on Kauai.

Safeway absorbed $1.5 billion in fourth-quarter charges to account for troubles at two grocers, Houston-based Randall's and Chicago-based Dominick's, that it bought for a total of $2.5 billion during the late 1990s.

If not for the charges and losses from discontinued operations, Pleasanton-based Safeway said 2002's final quarter would have produced a profit of $359.4 million, or 80 cents per share.

That figure beat the consensus estimate of 78 cents per share among analysts surveyed by Thomson First Call. Analysts lowered their estimates in November after Safeway management warned the company's results would be disappointing.

Safeway's shares closed down 46 cents to $21.53 on the New York Stock Exchange.

The setback during the three months ended Dec. 28 capped a dismal year for the nation's third-largest supermarket chain.

Besides sustaining losses on the Randall's and Dominick's deals, Safeway battled sagging sales in a sluggish economy that drove more shoppers to buy groceries at discounters such as Wal-Mart.

This trend continued to hurt Safeway in the fourth quarter as the company's sales from comparable stores open at least a year dipped 1.3 percent from the same 2001 period. Including newly opened stores, Safeway's fourth-quarter sales totaled $10 billion, an increase of less than 1 percent from the prior year.

To stimulate sales, Safeway and other retailers lowered prices, another factor contributing to the grocer's sliding revenue.

"Deflation in the fourth quarter was almost universal," Steve Burd, Safeway's chief executive, said during a conference call. "There was hardly a category left out of that."

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