Safeway said net income fell 6% in the fourth quarter as higher costs impacted profit margins.
PLEASANTON, Calif. — Higher food costs put pressure on the fourth-quarter earnings of Safeway here, the company said Thursday, as net income fell 6% despite a 6.2% increase in sales vs. a year ago.
Net income totaled $215.6 million on revenues of $13.6 billion for the 16-week quarter, which ended Dec. 31. Identical-store sales were up 1.5%, excluding fuel. The company attributed the higher revenue total to increased fuel sales, the impact of reporting commissions on its Blackhawk gift-card business on a gross basis, and ID-sales gains.
Gross profit for the quarter declined 137 basis points to 26.71% of sales, vs. 28.08% of sales in the fourth quarter of 2010. Excluding the 48 basis-point impact from fuel sales and the 48 basis-point impact from the change in reporting gift-card commissions, gross profit declined 41 basis points, due primarily to increased inventory expense, the company said.
For the fiscal year, net income attributable to Safeway was down 14%, to 516.7 million, on a 6.3% increase in revenues, to $43.6 billion.