US retailer Safeway posted a drop in quarterly profit today (30 April) as it cut its full-year forecast and raised its dividend.
Net income for the first quarter dropped to US$144.2m compared to $193.4m for the same period in 2008.
Chairman, president and CEO Steve Burd said the result was negatively impacted by the shift in holiday sales, a decline in the Canadian currency exchange rate, a decline in fuel margins and higher pension expense.
“We continued to make price investments to address the needs of our customers in this difficult economic environment. As a result, we saw an increase in the number of sales transactions and an improving trend in market share for the quarter,” said Burd. “Because we are confident in the underlying strength of the business and our cash flow, we are increasing our quarterly dividend by 21% and repurchasing company stock.”
Safeway lowered earnings guidance for the year to $2.10 – $2.30 per diluted share and identical-store sales guidance, excluding fuel, to 0.5% – 1.5%. The retailer increased free cash flow guidance for the year 2009 to $1.1bn – $1.3bn.
Total sales also declined, by 7.6% to $9.2bn in the first quarter from $10.0bn in the previous year. The drop was primarily due to lower fuel sales, a decline in the Canadian exchange rate and a shift in holiday sales.
Identical-store sales for the quarter, excluding fuel, declined 0.7%. After excluding the weeks affected by the shift in Easter holiday sales, identical-store sales, excluding fuel, increased to an estimated 0.2%.
Safeway announced separately today that its board of directors authorised a 21% increase in the quarterly dividend to $0.10 per share, effective for stockholders of record on 25 June 2009. The dividend will be paid on 16 July.