Safeway Inc reported a quarterly profit that beat analysts' low expectations, but shares fell 2.8% as higher food prices showed signs of denting demand at the second-largest US supermarket company.Inflation hit 4% during Safeway's third quarter and sales volume declines accelerated more than in the previous period, Chief Executive Steve Burd said on a conference call with analysts.
Safeway's net income for the third quarter ended September 10 rose 6% to $130.2 million.
Safeway's revenue rose a bit more than 7% to $10.06 billion, primarily because of higher fuel sales, and beat analysts' estimates of $9.86 billion.
Gross profit fell 114 basis points to 27% of sales. But gross margin was flat, excluding an 88 basis-point hit from fuel sales and a 26 basis-point charge from reporting gift card commissions.
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