The No. 3 US supermarket chain Safeway has reported net income of US$281.3m for the third quarter ended 7 September 2002, a telling decrease from the net income of $309.2m that the company posted for the third quarter of 2001, as competition from retail giant Wal-Mart takes its toll.

Third-quarter 2002 comparable store sales decreased 0.7% while identical store sales (which exclude replacement stores) fell 1.4%. Safeway characterised these decreases as the result of “continued softness in the economy”. Total sales increased to $8.1bn from $8.0bn in the third quarter of 2001, primarily due to new store openings.

The company repurchased 32.9m shares of Safeway’s common stock at a total purchase price of $918m during the quarter. From initiation of the programme in 1999 through to the end of the third quarter of 2002, Safeway has repurchased 79.7m shares of common stock at a total purchase price of $2.8bn leaving $0.7bn available for repurchase under the current level authorised by the company’s board of directors. The timing and volume of future repurchases will depend on market conditions.

Safeway, which operates 1,793 stores in the US and Canada, opened 55 new stores and closed 35 stores during the first three quarters of 2002. For the year, the company expects to spend approximately $1.9bn ($1.7bn in cash) while opening 75 to 80 new stores and completing approximately 200 remodels.