Safeway Profit Drops On Higher Costs

PLEASANTON (CBS/AP) - Safeway's profit in the second quarter fell 16 percent, as the grocery store operator spent more on advertising and launched a new loyalty program.

The Pleasanton-based company said higher costs offset rising sales rose and improving market share.

For the three months ended June 16, Safeway earned $122.7 million, or 51 cents per share. That's compared with a profit of $145.8 million, or 41 cents per share, in the year ago period, when there were more outstanding shares.

Analysts on average expect a profit of 49 cents per share, according to FactSet.

Sales rose 2 percent to $10.39 billion, which also topped Wall Street expectations.

Safeway operates about 1,700 stores in North America under names including Vons in Southern California and Nevada and Randalls in Texas.

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