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PLEASANTON, Calif. -- Safeway Inc. expects first-quarter earnings from continuing operations of 43 cents to 45 cents a share, and said same-store sales during the period were flat, while identical store sales fell 0.5 percent.
In a press release Tuesday, the supermarket chain said the preliminary earnings are lower than last year due to lower gross margins and higher operating and administrative expenses as a percentage of sales.
"While same-store sales trends improved over fourth quarter levels, the issues related to our centralized marketing organization had a greater impact on gross margins than we expected," said Steve Burd, chairman, president and c.e.o. in a statement. "This gross margin shortfall was due to learning curve issues in the new organization."
Thomson First Call puts Safeway's first-quarter 2003 earnings at 54 cents a share excluding goodwill. The company earned 67 cents a share before an accounting change last year.
Safeway said its preliminary first-quarter results were reduced by about 1.5 cents a share due to new accounting for vendor allowances.
The company also said increases in its operating and administrative expense were driven by soft sales and an expected rise in health and pension costs.
Safeway expects to work through its new organization issues throughout the second quarter, said Burd. "When fully integrated, the centralized marketing function is expected to achieve significant cost savings," he said.
Shares of Safeway, which plans to report first-quarter results May 1, closed at $20.40, down 10 cents or 0.5 percent, on composite volume of 2.24 million shares. Average daily volume is 2.38 million shares.