Pleasanton, California-based Safeway Inc., the third largest grocer in the US, has reported a 28% rise in fourth-quarter net income to US$384.1m, or 76 cents a share.

Overall, turnover increased 6.7% to US$10.7bn, while same-store sales rose 0.8% year-on-year, adjusted for the effects of a strike against the operator of Safeway’s Northern California distribution centre at the end of 2000. Safeway said that without the adjustment, sales rose 2.1%. 

Without a series of extra costs, Safeway said profit would have met the average estimate of analysts, reaching US$409.6m, or 81 cents a share. Company CEO Steve Burd explained that the costs were caused by theft, food spoilage and other factors.

Burd said that Safeway has been boosting sales of more profitable private-label goods, however, and the acquisition of Genuardi’s Family Markets last February gave the company an extra 95 outlets with which to boost sales figures.

Analysts suggest that increasing competition from discount chains over the next five years could mean that Safeway falls short of its long-term sales growth forecasts of 3% to 4%.