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FILE- In this Thursday, April 26, 2012, file photo, a Safeway online shopping advertisement is shown at a Safeway store in San Francisco. Safeway Inc. said Thursday, Oct. 11, 2012, its profit margin slipped in the third quarter as it spent money on launching a new customer loyalty program, an investment the supermarket operator said should drive sales going forward. The sale of its Genuardi's chain helped offset the decline and pushed the company's net income up 21 percent. (AP Photo/Paul Sakuma, File)

PLEASANTON -- Safeway's operating profits slumped amid fierce competition from other grocers last quarter, which caused the supermarket chain's shares to tumble more than 3 percent on Thursday.

The grocery chain's sales slipped 0.2 percent during the third quarter, which ended Sept. 8.

Safeway's shares fell 3.6 percent, or 58 cents a share, to finish at $15.71.

Including the effects of one-time gains, overall profits rose. The company posted gains from the sale of 17 Genuardi stores during the third quarter.

Pleasanton-based Safeway earned $157 million on sales of $10.05 billion, and operating profits totaled $218.3 million.

Compared to the year-ago third quarter, profits rose 20.6 percent, sales fell 0.2 percent, and operating profits declined 12.1 percent.

The decline in operating profits was due to one-time items that won't recur in the fourth quarter, Safeway said.

Same-store sales, excluding revenue from fuel sales, rose 0.1 percent. These sales are a closely watched barometer of the company's operations.

Safeway pointed to the launch of the Just for U customer loyalty program as a major initiative that will provide increased benefits for the grocer during the final three months of 2012 and beyond.

"If I were to describe the quarter as succinctly as I could, I would say it was a quarter of significant progress," Steve Burd, Safeway's chief executive officer, said in a conference call with analysts.

Contact George Avalos at 925-977-8477. Follow him at twitter.com/george_avalos.