Safeway profit tumbled in the first quarter as the supermarket chain began to fully see the financial hit of selling hundreds of stores in Chicago and Canada.
Profit at Pleasanton-based Safeway plummeted more than 52 percent from the first quarter of 2013. The company attributed much of the loss to the sale of 213 full-service grocery stores in western Canada -- a $5.2 billion deal that was completed in November -- and the sale of 72 Chicago-area Dominick's stores at the end of last year.
The company lost almost $77 million during the three months ending March 22. This compares with a gain of $119 million for the same period a year ago. Sales rose 1 percent to $8.3 billion.
The consolidation of the company has primed Safeway for its merger with Albertsons, which is expected to be complete by the end of the year. The merger is part of an estimated $9.4 billion deal orchestrated by New York private equity firm Cerberus.
Executives at Safeway canceled the usual conference calls with investors and the press until the merger is complete. Instead, a statement was posted to the company's website Wednesday afternoon.
"We are working diligently to close the merger with Albertsons by the fourth quarter," Safeway CEO Robert Edwards said in the statement.
The Federal Trade Commission is reviewing the merger and is expected to require that several stores be sold to comply with antitrust regulations. Stores to be sold would most likely be in Washington, Oregon, Colorado, Arizona and Texas -- states where each chain has a large footprint and both are top competitors.
Safeway shareholders will receive about $40 a share as part of the merger agreement.
Safeway said it was also hit with inflation in the first quarter, primarily in produce, meat and pharmacy products. Beef prices have hit an all-time high in the U.S., and the crippling drought in California has been blamed for the higher cost of some vegetables and fruit.
"We expect to pass along most of the inflation we are experiencing," Edwards said.
As part of the sale to Cerberus, Safeway this month spun off its remaining 38 million shares of Blackhawk Network, a gift card company Safeway once owned outright. Safeway is also working to sell its 49 percent stake in Casa Ley, a grocery chain in Mexico with about 185 locations, and in which Safeway has been a majority stakeholder since 1981.
