Safeway dumps Dominick's after Q3 profit swoon
Safeway plans to exit the Chicago market where it operates 72 supermarkets under the Dominick’s banner by early 2014 after posting third quarter profits that were roughly half those of the comparable period the prior year.
The decision to exit Chicago follows similar move earlier this year when Safeway announced the sale of its Canadian operations.
"The decision to sell Canada Safeway and to exit the Chicago market is consistent with Safeway's priority of maximizing shareholder value," said Robert Edwards, Safeway president and CEO. "These actions will allow us to focus on improving and strengthening our core grocery business. We are continuing to review all of our businesses to optimize our allocation of resources, improve sales and grow operating profits."
The company said exiting Chicago would result in a cash tax benefit of $400 million to $450 million which will be available in the short-term to partly offset the cash tax expense on the sale of the net assets of Canada Safeway Limited. Any proceeds from the disposal of Dominick's properties will be used to buy back stock and to invest in growth opportunities, the company said.
The news about Dominick’s was released in conjunction with third quarter results that saw sales and other revenue from continuing operations increase a meager 1.1% to $8.6 billion due mainly to a 1.9% increase in identical store sales. Adjusted net income for the period declined to $71.9 million, or 30 cents a share, to net income of $157 million, or 66 cents a share the prior year.