(Corrects historical stock activity in last paragraph) NEW YORK (Reuters) - Supermarket operator Safeway Inc posted a higher third-quarter profit on Tuesday, helped by cost controls as consumer spending weakened.
The company, whose chains include Safeway, Vons and Dominick's, also stood by its full-year forecast.
Safeway's third-quarter net income rose to $199.7 million, or 46 cents per share, from $194.6 million, or 44 cents per share, a year earlier.
Total sales were up 3.9 percent at $10.2 billion.
The results fell short of analysts' consensus estimate for earnings of 47 cents per share, according to Reuters Estimates. Analysts had also expected sales of $10.06 billion.
Identical-store sales rose 2.8 percent, or 0.5 percent excluding fuel sales. Safeway defines identical stores as those operating in the same period during the current and previous years. The figure does not include replacement stores.
Gross profit margin fell 102 basis points to 27.49 percent of sales in the quarter. Higher fuel sales -- which have a lower gross margin -- reduced gross profit margin by 55 basis points.
Safeway, which is opening upscale Lifestyle stores, confirmed it expects 2008 same-store sales growth, excluding gasoline sales, of 1 percent to 2 percent.
Safeway also confirmed its forecast for 2008 earnings of $2.25 to $2.35 per share and free cash flow of $500 million to $700 million.
Safeway said it expects to spend $1.65 billion to $1.70 billion in capital expenditures for the year.
In early trading, Safeway's shares rose 9 percent, or $1.97, to $23.62 on the New York Stock Exchange.
Its shares are down more than 30 percent year-to-date, compared with larger rival Kroger Co's
(Reporting by Sarah Coffey, editing by Maureen Bavdek)
