Pleasanton, Calif. – Safeway reported a net loss of $76.5 million in the first quarter of fiscal 2014, compared to net earnings of $118.9 million in the same period a year earlier. The company is working toward closing its $9.4 billion merger with Albertson’s by the fourth quarter of the current fiscal year.
Safeway cited the impact of inflation in some goods that it did not fully pass on to consumers as partially driving its net loss. In addition, translating Canadian dollars to U.S. dollars for financial reporting purposes in the sale of its Safeway Canada Limited business also negatively affected income.
Sales and other revenue increased 1.0% to $8.3 billion in the first quarter of 2014 from $8.2 billion in the first quarter of 2013, primarily due to an identical-store sales (excluding fuel) increase of 1.8%, partly offset by lower fuel sales in 2014.
“While sales met plan in the first quarter, income was slightly below plan, in part as a result of inflation in produce, meat and pharmacy that was not fully passed along for competitive reasons,” said Robert Edwards, president and CEO of Safeway. “In the second quarter of 2014, identical-stores sales are currently running well above 2%, and we expect to pass along most of the inflation we are experiencing. In addition, the direct and indirect cost initiatives we are implementing are expected to improve profitability in the second half of 2014."