Share “Safeway 4Q net income jumps”

Safeway 4Q net income jumps

Published on NewsOK Modified: February 21, 2013 at 12:51 pm •  Published: February 21, 2013

PLEASANTON, Calif. (AP) — Bring on the deal hunters.

Grocery store operator Safeway said Thursday its customer loyalty program helped its fourth-quarter net income jump 13 percent in the fourth quarter, far surpassing expectations.

Shares jumped more than 13 percent in afternoon trading on the better-than-expected results.

Supermarkets have struggled to find the balance between customers' need for low price food and fluctuating food costs. Also, in addition to competition from retailers such as Target and Wal-Mart, traditional supermarkets are competing more with drugstore chains and dollar stores.

Safeway's solution has been investing heavily in its "Just for U" customer loyalty program, which offers personalized discounts based on past purchases. The Pleasanton, Calif.-based grocer said Thursday the program is driving market share gains and profits, evidence that the investment is beginning to pay off.

CEO Steven Burd said about 45 percent of its sales are from people registered for its loyalty program. The goal is 65 percent. So far the program is performing better than expectations, Burd said.

"Our best customers are becoming increasingly more loyal and buying more items per trip," Burd said.

The mobile component of the program, which includes apps for most smartphones and an iPad app launched last quarter, has had higher usage than expected. Digital coupons have also performed well, an area that Safeway wants to expand, Burd said.

"As people become more digital, there is an opportunity which we are working hard at to actually get out of the paper ads and make the ad itself personalized for every household," he said.

Safeway Inc., which runs its namesake chain as well as Vons, Dominick's and others in the U.S. and western Canada, said that in the three months ended Dec. 29, net income rose 13 percent to $244 million, or $1.02 per share. That compares with $215.6 million, or 67 cents per share, in the prior year. Excluding a benefit from a legal settlement, it earned 94 cents per share. That handily beat analyst expectations of 76 cents per share, according to a FactSet poll.

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