Safeway (SWY) shares jumped 5.5% in early trading after the supermarket chain posted better than expected earnings results and growing-same store sales.
Safeway posted 38 cents of EPS, three cents better than expectations. Same store sales jumped 4.9%, or 1.5% after excluding fuel. The company’s gross profit margin narrowed to 27% from 28.2%. The company said that margins were lower because of higher fuel sales (presumably those margins are weaker) and a change in accounting for gift cards. The company also said operating expenses fell by 100 basis points to 24.5% as it attempts to control expenses on the face of escalating food costs.
Same store sales should rise about 1% for the year, Safeway said in reaffirming its guidance. The stock is down 16% for the year.
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