PLEASANTON, Calif. — While lifestyle stores continue to generate strong sales gains for Safeway here, the retailer here said product price inflation slowed quarterly earnings and is clouding the outlook for the second half of the year. “As good as we feel about the back half of the year, we think there is enough inflation and worry out there that we just want to be a little cautious,” Steve Burd, chairman, president and chief executive officer of Safeway, said in a conference call Thursday, explaining that Safeway would not raise its yearly earnings guidance. Sales during the fiscal second quarter ended June 16 increased 4.9% to $9.8 billion, with identical store sales, excluding fuel, increasing by 3.7%, Burd said. Net income fell by 11.4% $218.2 million. Gross profits, excluding fuel, were flat from a year ago but down from a 20-basis-point increase in the first quarter.
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