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NEW YORK - An earnings warning today from Safeway crushed the entire grocery-store sector in early trading, CBS Market Watch reports.
Safeway cautioned investors that profits, before charges, would fall short of expectations by as much as 6 cents a share to a range of 71 cents to 73 cents a share for the second quarter. The company blamed the underperformance on softness in the economy, stepped-up competition and, "an overly aggressive shrink effort." Safeway also said there have been "disruptions" relating to its efforts to centralize buying and merchandising.
Safeway's warning came only days after Wal-Mart Stores reported an 11 percent market share of all grocery sales and laid out plans to expand food-heavy concepts.
Shares of the powerhouse Safeway plummeted 15 percent, trading recently at $31.40, down $4.78.
Other grocery-store chains dived right alongside Safeway. Winn-Dixie plunged by nearly 8 percent, or $1.39, to $16.90; Great Atlantic & Pacific Tea Co. wiped out 6.6 percent, or $1.34, to $18.97; Kroger erased 6.4 percent, or $1.35, to $19.85. Albertson's subtracted $1.51, or 4.7 percent, to $30.49.
In other financial news, A&P said Tuesday that the filing of its annual report continues to be delayed by an internal investigation into its accounting practices.