April 25 (Bloomberg) -- Safeway Inc. plunged the most in 10 years after the second-largest U.S. supermarket chain reported first-quarter same-store sales that were lower than it previously estimated.
The shares fell 14 percent to $24.32 at the close in New York, the largest drop since April 2003. Safeway, which operates 1,638 stores in the U.S. and Canada, had gained 56 percent this year through yesterday, compared with an 11 percent increase for the Standard & Poor’s 500 Index.
Same-store sales excluding fuel rose 1.5 percent in the first quarter, the Pleasanton, California-based company said in a statement today. Chief Executive Officer Steve Burd, who will retire in May after 20 years at the company, said on a conference call in February that same-store sales may rise 1.8 percent to 2 percent in the period.
“The sales were disappointing, and they had talked them up,” Meredith Adler, a Barclays Plc analyst, said today in a phone interview. “That would imply that the last four weeks slowed a lot. If you looked at the long-term trends of this company, they have been very poor, and they have initiatives to try to turn it around, but there’s not really any indications that those are working yet.”
Adler, who is based in New York, projected a 1.8 percent increase in same-store sales. She has an underweight rating on the shares, the equivalent of a sell.
Earnings per share in the quarter ended March 23 totaled 35 cents, matching the average estimate of 18 analysts surveyed by Bloomberg. Total revenue was little changed at $9.99 billion. Analysts projected $10.16 billion, on average.
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