Safeway Inc. , the No. 3 US grocer, on Tuesday posted its biggest quarterly sales rebound in more than three years due to improved customer service and a focus on fresh foods, and its stock rose 9 percent.
Identical store sales, which strip out new or replacement stores, increased 2.8 percent in the first quarter before the effect of fuel sales and a strike that hit Southern California stores more than a year ago, Safeway said.
Identical store sales are a key gauge of supermarket sales growth. Including fuel sales, identical store sales rose 4.0 percent in the quarter.
Total sales for the quarter rose about 12 percent to $8.6 billion, from $7.7 billion in the prior year.
Safeway, based in Pleasanton, California, also said it was launching an advertising campaign called “Ingredients for Life” that highlights its fresh fruits and vegetables and private label brands.
The $100 million ad campaign, which will run for 12 months, will also highlight customer service and store offerings that include, meat, bakery, deli products and prepared meals, the company said.
Safeway, which along with rivals Kroger Co. and Albertsons Inc. face stiff competition from giant discounter Wal-Mart Stores Inc. , said the nationwide advertising campaign would kick off on April 18.
Safeway shares jumped to $20.32 on slim volume in premarket trade on the Inet electronic brokerage system, up from a close of $18.65 on Monday on the New York Stock Exchange.
Safeway is scheduled to report its first-quarter results on May 3.
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