Private Label Buyer

Safeway CEO: Organics Help PL Sales

October 15, 2012

Safeway reported lower quarterly sales last week, citing costs related to its Just for U launch and the sale of its Genuardi’s stores. But CEO Steven Burd told analysts on a conference call that the company has seen benefits in private brand sales from its organics division.

Answering questions from an analyst, Burd talked about Safeway’s continued focus on organic and natural products.

“I think there’s a long-term interest in organic, and I think there’s a long-term interest in natural products,” Burd told investors, according to a transcript from Seeking Alpha. “I think people are striving to – people understand the relationship between nutrition and health. … I think it’s … it’s not a fad, I think it’s a trend. I think it’ll continue to grow. Our organics business continues to do well. Our organic produce items continue to grow. And I think that that’s a long-term trend.”

Asked in a follow up whether organics had contributed to Safeway’s private brand penetration, Burd simply answered yes.

Safeway reported profits of $108 million in the third quarter, down from $130.3 million a year earlier. Burd said Safeway costs for Just for U and Genuardi’s totaled $21 million in the quarter, leaving profits essentially flat from the third quarter of 2011.

After stock buybacks cut down the level of available Safeway stock from a year ago, earnings per share for the quarter totaled 45 cents, up from 38 cents a share a year ago.