) debriefed investors about its financial goals for 2013 and
reviewed its 2012 performance during its annual investor
conference. Following the confab, shares of this food and drug
retailer touched a new 52-week high of $25.14 on Wednesday, Mar
6. The closing price of $23.94 reflects a solid year-to-date
return of 30.5% for the stock.
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Safeway envisages earnings per share in the band of $2.25 and
$2.45 for 2013 that reflects annual growth in the range of 4.9%
to 14% (based on adjusted earnings of $2.15 in 2012). The current
Zacks Consensus Estimate of $2.25 hovers around the lower end of
Safeway's guidance range. The company attributed the earnings
upside to its expectation of identical stores (excluding fuel)
sales growth of 2% to 3%. This compares with the annual growth of
0.5% for identical stores (excluding fuel) in 2012.
On the margin front, Safeway expects operating profit margin to
decline by 11-21 basis points (bps) in the ongoing year.
Excluding fuel and benefit from legal settlements, operating
profit margin is expected to remain flat or inch up by 10 bps
during 2013. Safeway expects to incur capital expenditure in the
range of $1 billion to $1.1 billion throughout the year. Free
cash flow is anticipated to be in the band of $0.85 billion and
As reported earlier, Safeway's earnings of $2.27 in 2012
surpassed its original guidance of $1.90-$2.10. The company also
exceeded its projection for free cash flow. However, identical
store (excluding fuel) sales growth came in lower than the
original guidance of 1%-2% sales growth.
Several strategic steps undertaken by Safeway in 2012 such as the
rollout of the 'just for U' loyalty program and fuel partnerships
) among others supported market share gain and volume growth in
the U.S. Going forward, the company is optimistic that sustained
momentum from its initiatives will yield positive outcome.
Safeway continues to tick higher on positive driving events.
Estimate revision trend also reflects bullish sentiments towards
the company's performance in the current year. Accordingly, the
stock carries a Zacks Rank #2 (Buy). Another Zacks Rank #2
healthcare stock is