US retailer Safeway today (23 July) said the economy is not performing as well as it had expected as it released its second-quarter results.

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The supermarket chain lowered its full-year profit guidance to $1.70 to $1.90 per share this year, with a decline in identical-store sales of 1% to 1.7%.


Speaking at the company’s earnings conference call today, chairman, president and CEO Steve Bird said Safeway had seen a shift downwards in the economy and in the attitude of customer, with trading down accelerating.


“We never predicted that the economy would necessarily recover but we didn’t expect another drop,” Bird said. “When you trade down from a medium or even expensive bottle of wine to a lower price-point there is going to be a lot less there and we are seeing people trade down in virtually every category.


“Floral bouquets to maybe a dozen roses; basically in every category we’ve been able to identify a trade down and if the price trades down that’s going to affect your income.”

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The retailer posted an increase in second-quarter net profit to US$238.6m for the period ended 20 June 20, from $234.3 million, or 53 cents per share, a year earlier.


Sales however, fell 6.5% to $9.5bn, primarily due to lower fuel sales, a decline in the Canadian exchange range and a 1.5% decline in identical-store sales.


Despite this, Bird remained positive about the company’s future. “We should be in a great position in 2010 …if the economy stabilises and if it starts to recover, frankly we’ll be in terrific shape,” he said.


“We like our positioning, we like the strength of our balance sheet, and we’re focused on the building of the business and creating shareholder value.”