PLEASANTON, Calif. — A massive goodwill write-off in its Vons and Eastern divisions triggered a $1.6 billion loss in the fourth quarter for Safeway, the retailer here said Thursday.
The $1.8 billion charge was necessitated by a sharp decline in year-over-year share prices, Safeway officials said. Excluding the charge, Safeway posted net income of $209.1 million for the quarter that ended Jan. 2, down from $338 million in the fourth quarter last year. Those results were in line with analyst estimates.
Sales of $12.7 billion in the quarter decreased by 8.1%, driven by an extra week in the previous period, food price deflation, and identical-stopre sales declines of 4.1%, Safeway said. Gross margins as a percent of sales declined as Safeway continued investing in lower everyday pricing. Steve Burd, chief executive officer, said however that those investments have closed the gap between Safeway and its largest conventional store competitors in all of its markets.
For the fiscal year, Safeway reported sales of $40.9 billion, down 7.4% from $44.1 billion in a 53-week 2008 fiscal year. The company posted a $1 billion annual loss, or a gain of $720.7 million in net income excluding the goodwill impairment charge.
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