Safeway's third quarter profit fell 35.5% to $128.8 million from $199.7 million in the same year-earlier period on a 7% decline in sales to $9.5 billion from $10.2 billion. Diluted earnings per share came in at $0.31, down 32.6% from $0.46 in the same year-earlier period but above analysts' consensus estimate of $0.29. The sales decline was attributed to lower fuel sales, a 3.0% decline in identical-store sales for the quarter, excluding fuel, and a decline in the Canadian exchange rate.

On its quarterly conference call company president Steven Burd told analysts the largest factor in the increased expenses was a write-down of the value of its real estate, which the company has invested in heavily in recent years. The second largest factor was the decrease in sales volume.

Regarding the real estate, the company spent $157.2 million in the third quarter to open five new "lifestyle" stores, closed 10 stores and complete 16 lifestyle remodels. Year-to-date, the company has invested $602.8 million opening seven new lifestyle stores, closing 16 stores and remodeling 62 stores. By the end of the year, the company expects to have spent $1 billion opening 10 new stores and remodeling 85 stores. It did not speculate how many more store closures there would be prior to the end of the year.