UPDATE 2-Safeway shares jump as discount program boosts sales

Thu Feb 21, 2013 2:24pm EST
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(Adds details from conference call, background, updates trading)

By Lisa Baertlein

Feb 21 (Reuters) - Safeway Inc said Thursday a new personalized discount program boosted sales in the first quarter of 2013 compared with the fourth quarter, sending shares up nearly 14 percent on the New York Stock Exchange.

The second-largest U.S. supermarket chain, which operates the Safeway, Vons and Dominick's supermarkets, also reported stronger-than-expected fourth-quarter profit and said it saw no impact from a recent U.S. payroll-tax hike, which had eaten into the take-home pay of many shoppers.

Investors had been looking for signs of progress from Safeway, which has been working to attract customers and boost sales amid tough competition from traditional grocers such as Kroger Co and discount retailers ranging from Wal-Mart Stores Inc to dollar stores.

If trends hold for the remainder of the week, Safeway's identical-store sales will be up 2 percent for the initial eight weeks of the first quarter of 2013, Steve Burd, Safeway's chairman and chief executive, said on a conference call with analysts.

Safeway's identical-store sales were up 0.8 percent, excluding fuel, in the fourth quarter.

At Safeway, that closely-watched measure includes results from established supermarkets that have not been replaced or significantly renovated.

The company's shares were up 13.5 percent at $22.84 in afternoon trading on the New York Stock Exchange.   Continued...