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PLEASANTON, Calif. - Safeway Inc. on Friday reported net income of $309.2 million ($0.60 per share) for the third quarter ended September 8, 2001. This represents a 15% increase from net income of $270.0 million ($0.53 per share) for the third quarter of 2000.
Total sales increased 6.8% to $8.0 billion from $7.5 billion in the third quarter of 2000 primarily because of the Genuardi's acquisition, new store openings and increased sales at continuing stores. Third-quarter 2001 comparable-store sales increased 1.6%, while identical-store sales (which exclude replacement stores) rose 0.8%.
Gross profit increased 95 basis points to 30.95% of sales in the third quarter of 2001 from pro forma gross profit of 30.00% in the third quarter of 2000 due primarily to continuing improvements in buying practices, shrink control, private-label growth and targeted adjustments in promotional spending. Operating and administrative expense, including goodwill amortization, increased 77 basis points to 23.43% of sales in the third quarter of 2001 compared to pro forma operating and administrative expense of 22.66% in the third quarter of 2000 due primarily to previously discussed unfavorable comparisons in property gains and pension income, as well as higher real estate occupancy costs.
The Company has repurchased 4.6 million shares of Safeway's common stock at a total purchase price of $191.1 million from the beginning of the quarter through September 27, 2001. Due to timing of the repurchases, the net impact of the reduced shares outstanding and the related interest expense incurred had no material impact on earnings per share in the third quarter.
Safeway's Board of Directors has increased the authorized level of the company's stock repurchase program by $500 million to $1.5 billion from the previously announced level of $1.0 billion. To date, Safeway has repurchased $842 million of common stock, leaving $658 million available to be repurchased under the new authorized level. The timing and volume of future repurchases will depend on market conditions.
"The increased authorization of our stock repurchase program reflects the Board's continued high level of confidence in the growth prospects of the company," said Steve Burd, Chairman, President and CEO of Safeway. "Current market conditions provide an excellent opportunity for us to buy back our shares."