Shares in Safeway Inc have fallen today (21 July) despite the US retailer saying that its second-quarter earnings “exceeded” expectations.

Safeway’s shares were down 6% today at 10:06 ET to US$22.20 a share after the retailer reported a 3.2% increase in net income to reach US$145.8m.

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For the quarter ended 18 June, sales were up 7.1% to $10.2bn. It attributed the sales growth to higher fuel sales, a higher Canadian exchange rate and a 0.5% increase in identical-store sales.

“Second quarter earnings results exceeded our expectations,” said chairman, president and CEO Steve Burd. “Identical-store sales improved during the second quarter and into the third quarter. We remain focused on building customer loyalty and expect sales to continue to gradually improve through the second half of the year.”

For the first half, net income fell to US$171m from 237.3m, primarily due to the $80.2m tax expense on repatriated earnings from Canada which it recorded in the first quarter. Excluding the charge, net income would have reached $251.2m.

Sales were up over the half to reach $19.9bn, up on the $18.8bn reported in the same period of 2009.

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Click here for the full statement from Safeway.

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