Market Overview

Safeway Fourth Quarter Earnings

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Safeway (NYSE: SWY) announced on February 19 that it is considering a possible sale of the company. Safeway stated, perhaps oddly, “Although the discussions are ongoing, the company has not reached an agreement on a transaction, and there can be no assurance that these discussions will lead to an agreement or a completed transaction.”

In addition to this news, Safeway is going to dispense the rest of the 370.8 million shares that it possesses of Blackhawk Network (NASDAQ: HAWK), or approximately 72 percent of Blackhawk's outstanding shares to Safeway stockholders or investors. The company also owns 49 percent of Casa Ley S.A. de C.V., the fifth-largest food and general merchandise retailer in all of Mexico, based on sales. Safeway also has plans to sell its stake in this company as well.

It is possible that Safeway is begging to sell its stake in these companies to eliminate any unnecessary risk to gain its target of an acquisition.

Safeway reported fourth quarter revenue of $11.3 billion, which was compared to an $11.2 billion for the fourth quarter of 2012. Operating and administrative expenses also increased 58 percent, to 24 percent of sales in the fourth quarter.

After Wednesday's close, Safeway was trading up $1.39 or 4.02 percent to an aggregate total of $36.00 per share.

Safeway has issued forward guidance, which reflects that its free cash flow will increase by about 10 percent and earnings and revenue will increase as well.

Posted-In: Earnings News Guidance

 

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