OAKLAND, Calif. -- Safeway here reported increased sales and earnings in the second quarter and first half ended June 17 -- despite a nine-day strike in April that affected 208 of its northern California stores.
For the quarter, the 1,057-store company reported net income of $68.7 million, compared with income (before an extraordinary charge of $7.4 million for early debt retirement) of $58.9 million for the second quarter of 1994.
As reported, the company was involved in a labor dispute with the United Food & Commercial Workers Union, which Safeway said reduced earnings by an estimated 5 cents per share.
"It was a fairly brief strike, but it was more meaningful than I had thought," said Jonathan Ziegler, an analyst with Salomon Bros., New York. "I was looking for 3 cents per share [impact]. But earnings also came through higher than expected."
Sales, which were also affected by the strike, increased 3.9% to $3.8 billion for the quarter, according to the company. Same-store sales increased 3.4%.
"Same-store sales were up significantly despite the penalty of the strike," Ziegler noted. "No one in the industry is putting up numbers anywhere near that. It shows that Safeway is definitely winning share in its markets."
For 24 weeks, net income was $130.7 million, compared with income before the $7.4 million charge of $100.8 million in 1994. Sales were up 4% to $7.4 billion, with same-store sales growth of 4.2%.
Equity in earnings of unconsolidated affiliates, recorded on a one-quarter delay basis, was $5 million in the second quarter, down from $7.9 million in 1994. Safeway's share of Arcadia, Calif.-based Vons Cos.' earnings increased to $4.6 million in the second quarter from $2.8 million in 1994. But higher earnings from Vons were offset by lower earnings from Casa Ley in Mexico, which fell to $400,000 in the second quarter of 1995 from $5.1 million in 1994 in the wake of high Mexican interest rates and the devaluation of the peso.
During the first two quarters of 1995, the company invested $188 million in capital expenditures and opened nine new stores. Safeway said it plans to invest more than $450 million in capital expenditures this year, mainly to open between 25 and 30 new stores and complete more than 100 remodels.