Safeway (NYSE:SWY) is planning to increase prices to offset higher costs for produce, meat and pharmacy products in its U.S. grocery store locations.
"We expect to pass along most of the inflation we are experiencing" to shoppers in the second quarter, said Robert Edwards, Safeway's president and CEO. He did not specify how much prices would increase.
News of the price increase comes as Safeway's earnings tumbled in the first quarter partly due to a financial hit from selling hundreds of stores in Chicago and Canada. Profit plummeted more than 52 percent from the first quarter of 2013. The company reported a loss of $83.1 million compared to a $59.7 million profit during the same quarter last year. Same-store sales were up 2 percent during the quarter.
The company attributed much of the loss to the sale of 213 full-service grocery stores in western Canada and the sale of 72 Chicago-area Dominick's stores at the end of last year.
Safeway is in the midst of a merger with Albertsons, which is expected to be complete by the end of the year. The merger is part of an estimated $9 billion deal orchestrated by private equity firm Cerberus Capital Management.
The acquisition will create a diversified network of grocery retailers that includes more than 2,400 stores, 27 distribution facilities and 20 manufacturing plants, and roughly 250,000 employees.
-See this Safeway press release
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