US grocery retailer Safeway has reported lower second-quarter net income as the company continued its recovery from a four-month long strike which ended in February.

The company posted net income of US$155.2m, or 35 cents per share, for the second quarter to 19 June, compared to $161.0m, or 36 cents per share, in the year-ago period.

Safeway said the result includes the estimated impact of approximately $50m, after tax, related to its recovery from the strike in Southern California. Excluding the impact of the strike recovery, second quarter 2004 earnings were 46 cents per share.

The grocery workers' strike, which affected Safeway's 289 stores in Southern California, began on 11 October 2003 and lasted until 26 February 2004. In a bid to win back customers and boost sales Safeway has introduced promotional pricing, direct marketing and the introduction of new proprietary products, such as Ranchers Reserve Beef. The company said such measures have improved sales in Southern California, but not yet to pre-strike levels.

Total sales increased to $8.4bn in the second quarter of 2004 from $8.2bn a year earlier, primarily due to additional fuel sales and new store openings. Excluding sales at strike-affected stores, comparable store sales increased 2.3% and identical store (which exclude replacement stores) sales increased 1.9%.