Safeway Inc has booked a 74% plunge in first-quarter net income, despite higher revenues, due to a non-recurring tax charge related to its plan to pay down debt.
The supermarket operator said that net income dropped to US$25.1m, down from $96m last year. However, excluding the $80.2m tax charge and other one-time items, Safeway said net income totalled $105.3m.
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Revenue rose 5% to $9.77bn thanks to higher gas prices, the group revealed today (28 April). Identical sales, excluding fuel, edged up 0.4%, Safeway added.
In March, Safeway said it plans to pay US debt with part of a $1.1bn dividend from its Canadian operations. The dividend is being paid in two instalments – the first, of $600m, will be paid in the first quarter.
Safeway reaffirmed its forecast for full-year earnings of $1.45 to $1.65 per share. Excluding the charge related to the Canadian dividend, the company expects net income of $1.60 to $1.80 per share.
“Our first quarter results are in line with our expectations, and we are pleased with our improving sales trends,” said chairman, president and CEO Steve Burd. “Identical-store sales, excluding fuel, improved for the fifth consecutive quarter and are now positive. We are successfully passing cost inflation along at retail, while making appropriate price adjustments to remain competitive.”
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