Dominick's parent profit surpasses estimates as tax expenses decline

Safeway Inc., which has its Dominick's grocery chain based in Oak Brook, Thursday posted third-quarter profit that topped analysts' projections as income-tax expenses dropped.

Safeway said today that profit, excluding some items, was 35 cents a share, compared with the 31-cent average of estimates compiled by Bloomberg. A decline in Safeway's tax rate helped add 2 cents in profit.

Sales dropped less than 1 percent to $9.4 billion. The grocer is increasingly vying with discount retailers such as Wal-Mart Stores Inc. and Target Corp. for customers. U.S. consumers have sought discounts as they struggle to recover from the economic slump and an unemployment rate close to a 26-year high.

Safeway rose 66 cents, or 3.1 percent, to $21.98 at 9:53 a.m. in New York Stock Exchange composite trading. The shares were little changed this year before today.

Net income fell to $122.8 million, or 33 cents a share, the company said. A year earlier, third-quarter profit amounted to $128.8 million, or 31 cents.

Safeway also said full-year earnings will come in at the lower end of its outlook. In July, the company cut its earnings forecast for the year to at least $1.50 a share from a minimum of $1.65. Analysts on average project $1.56.

Safeway, led by Chief Executive Officer Steve Burd, trails Walmart, Kroger Co. and Costco Wholesale Corp. in grocery sales, according to data compiled by Bloomberg.