Safeway Inc. reported a plunge in earnings, in part from a year-ago tax benefit, and virtually flat revenue for its fiscal 2010 second quarter.

"Our second-quarter results were in line with our expectations, and we are encouraged by our volume trends in the quarter," Safeway chairman and chief executive officer Steve Burd commented.

PLEASANTON, Calif. — Safeway Inc. reported a plunge in earnings, in part from a year-ago tax benefit, and virtually flat revenue for its fiscal 2010 second quarter.

Safeway Inc. reported a plunge in earnings, in part from a year-ago tax benefit, and virtually flat revenue for its fiscal 2010 second quarter.

The supermarket retailer said Thursday that net income for the 12 weeks ended June 19 came in at $141.3 million, or 37 cents per diluted share, compared with $238.6 million, or 57 cents per diluted share, a year earlier. The 2009 second quarter included a $57.8 million tax benefit, or 14 cents per diluted share, from the resolution of a tax matter, the company noted.

According to Thomson Financial, the average analyst estimate for the 2010 quarter was for earnings of 37 cents per share, with the forecast ranging from a low of 30 cents to a high of 44 cents per share.

Safeway said total sales for the second quarter were $9.52 billion, up slightly from $9.46 billion in the prior-year period. A higher Canadian exchange rate and higher fuel sales were largely offset by a 2.5% decline in identical-store sales, excluding fuel, according to the company.

"Our second-quarter results were in line with our expectations, and we are encouraged by our volume trends in the quarter," Safeway chairman and chief executive officer Steve Burd said in a statement. "However, deflation continues in price per item and is not expected to significantly improve until the fourth quarter. As a result, we have lowered our expectations for the balance of the year."

Safeway revised its earnings guidance for the year to $1.50 to $1.70 per diluted share, down from its projection of $1.65 to $1.85 per diluted share in late April. Wall Street’s average forecast is for earnings of $1.69 per share, Thomson Financial reported.

The retailer also pruned its nonfuel identical-store sales forecast to -1% to -1.5% from its previous guidance of growth of 0% to 1%.

In the second quarter, Safeway opened five new stores, completed 17 Lifestyle remodels and closed five stores. For the year, the food and drug retailer plans to open approximately 15 new Lifestyle stores and complete about 60 Lifestyle remodels. The company currently operates 1,712 stores in the United States and Canada.