US supermarket chain Safeway has warned of a deteriorating financial performance during the last quarter of the year.

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The grocery retailer said that it is expecting fourth-quarter profit of 78-80 cents per share below analysts’ average estimate of 82 cents per share.

Safeway blamed slower sales growth and escalating staff health-care costs for the reduction in profits. The company said it would cut prices to try to win back customers from discount chains such as Wal-Mart.

Shares in Safeway dropped to a six-year low of US$19.84 on the news of reduced forecasts.

Around 9000 workers at Safeway’s Chicago Dominick’s division voted on Sunday to authorise a strike to reinforce their demands for higher wages and healthcare benefits.

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Sales at Dominick’s have been in decline since Safeway acquired the 113-store chain in 1998. Workers at the chain have accused Safeway of using them as scapegoats for the chain’s own poor management. Safeway says it will not give in to the workers’ pay demands.

Safeway has already warned that it may close the division if its workers go ahead with a strike. Safeway CEO Steve Burd told a recent web conference: “Our survival depends on introducing market rate wages and benefits.” He warned that a strike would “kill the business” and that striking workers would not be entitled to any severance pay or benefits, reported Reuters.