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.