PLEASANTON, Calif. — PLEASANTON, Calif. (AP) Safeway said Thursday its third-quarter net income fell 58 percent, hurt by a software impairment charge, higher theft and lower property gains.
Results beat expectations however and shares rose 6 percent in aftermarket trading.
The grocery chain, which operates 1,406 stores in the U.S., also says it’s exiting the Chicago market by early 2014 to focus on more profitable business. It operates 72 Dominick’s stores in Chicago that have been losing money. The move comes after Safeway said in June it would sell its Canadian stores.
The company said so-called “shrink,” the loss of inventory due to theft or employee error, hurt results by 6 cents per share. The shrink mainly related to fresh produce was due to a change in strategy that focused more on improving sales than controlling shrink, the company said. The strategy has been modified and shrink in the first four weeks of the fourth quarter has fallen back in line with expectations.
Safeway expects to get a cash tax benefit of $400 million to $450 million for exiting the Chicago market. That will partly offset its cash tax expense related to selling its Canada stores in June.