PLEASANTON (CBS/AP) — Safeway reported a tax charge related to a plan to pay down its U.S. debt drove down its first-quarter net income by 74 percent.

But its revenue rose, and its adjusted profit beat analyst expectations.

The Pleasanton-based grocery operator said Thursday that its net income fell to $25.1 million, or 7 cents per share, compared with $96 million, or 25 cents per share, a year earlier.  But it said it made 29 cents per share excluding the tax charge.

Analysts expected 23 cents per share.

The charge was related to Safeway’s plan to pay down U.S. debt with a dividend from its Canadian operations.

Revenue rose 5 percent to $9.77, beating expectations for $9.45 billion.

Traditional grocery stores are facing rising competition from discount stores and rising food costs.

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services may have contributed to this report.)


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