Safeway 3Q profit drops 35 percent on slow sales

PORTLAND, Ore. - Safeway Inc. said Thursday that falling prices and frugal shoppers drove its third-quarter profit down 35 percent. Despite the squeeze, the profit topped Wall Street expectations and sent shares up sharply in trading Thursday. Safeway recently began lowering prices on some key items at its grocery stores to draw today's cost-conscious shopper. The move, enacted later than some competitors, seems to have paid off as more shoppers came to its stores and with greater frequency during the quarter. But Safeway's profitability suffered as consumers continued to limit their spending and buy items at lower prices than normal. The company reported that it earned $128.8 million, or 31 cents per share for the quarter, down from $199.7 million, or 46 cents per share, a year earlier.

- Associated Press