United States-Supermarket profits.

UNITED STATES-SUPERMARKET PROFITS.

US retailer Safeway today posted a 12% increase in fourth-quarter net income, but results fell short of expectations.

Net income for the period reached US$338m, or 79 cents a share, up from $301.1m, or 68 cents a share, a year earlier.

Total sales increased 3.4% to $13.8bn in the fourth quarter of 2008 compared to $13.4bn in the same period of 2007. This increase was driven by the additional week in 2008 and identical-store sales increases, excluding fuel, of 0.4%, partly offset by a decrease in the Canadian exchange rate and lower fuel sales.

Analysts expected earnings of 81 cents a share on revenue of $14.3bn.

Net income for 2008 was $965.3m compared to $888.4m in the 52-week year 2007. Annual earnings per diluted share increased 11% over last year.

Sales increased 4.3% to $44.1bn in 2008 from $42.3bn in 2007 primarily due to the additional week in fiscal 2008, increased fuel sales and identical-store sales increases, excluding fuel, of 0.8%.

Safeway confirmed guidance for the year 2009 of $2.34 to $2.44 per diluted share and free cash flow of $1.0bn to $1.2bn.

"Despite a difficult economic environment, our efforts to control costs helped increase fourth quarter earnings per share by 16% over last year," said Steve Burd, chairman, president and CEO. "In addition, we increased annual free cash flow 62% to $681m. We are stepping up our efforts to provide increased value to our customers by lowering prices on everyday items, while continuing to provide quality perishables and great service."