US retailer Safeway Inc has booked an increase in third-quarter earnings, helped by one-time items, but reported a drop in operating profit as it battled weak consumer confidence.

The company said yesterday (11 October) net profit increased 20.6% to US$157m in the three months to 8 September. The bottom line was boosted by proceeds from the sale of Safeway’s 17 Genuardi stores, which was completed during the third quarter.

However, operating profit fell 12.1% in the period as the group invested heavily in its loyalty programme and battled depressed consumer sentiment. Operating profit dropped to $218.3m, the company revealed.

Nevertheless, chairman and CEO Steve Burd said that Safeway was “pleased” with its progress in operating profit. “While our operating profit margin declined 30 basis points in the quarter, the decline is explained by items that will not continue in the fourth quarter,” he said.

“Our just for U loyalty program continues to gain momentum with our customers, and it is helping them save money every time they shop. The incremental sales driven by just for U helped to offset lower inflation in the third quarter and improve volume share,” Burd added.

Total sales were down 0.2%, while same-store sales excluding fuel edged up 0.1%.

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Safeway shares closed down more than 3% yesterday at $15.71.

Check back for more analysis from just-food Safeway’s third-quarter numbers.