OAKLAND, Calif. -- Safeway here said net income totaled $41.9 million in the first quarter ended March 26, a turnaround from a loss of $1.7 million in last year's first quarter.
in the 12-week quarter rose 2.6% to $3.5 billion. Same-store sales (excluding the effect of the Canadian exchange rate) increased 4.2%. The 1,075-store chain has reported five consecutive quarters of positive same-store sales results.
Gross margins totaled 27.26% of sales in the quarter, an increase of seven basis points.
Operating and administrative expenses declined 59 basis points to 23.89% of sales. Higher sales, competitive labor contracts in Alberta and programs to control expenses contributed to the lower expense percentage, Safeway said.
Steve Burd, president and chief executive officer, said as a result of the reduced expenses, Safeway has "delivered greater value" to its customers and thereby increased sales despite low inflation.
Jonathan Ziegler, a securities analyst with Salomon Bros., New York, said Safeway's results were "much better" than expected.
"The real surprise was the comps of 4.2%, which are one of the best results in the industry," Ziegler said.
Ed Comeau, an analyst with Lehman Bros., New York, said the first quarter was "a good solid quarter in which Safeway continued to demonstrate good cost controls and to pass those savings on to consumers in the form of sharper prices."
