Coffee Sales Give Clues About Economy

 

For those eagerly seeking signs of the recession’s end, Steven Burd, CEO of Safeway Inc., Pleasanton, Calif., told the Los Angeles Times to keep an eye on coffee.

 

Speaking to investors about Safeway’s third-quarter profit, Burd said shoppers were starting to trade up to more expensive items after a long period in which they sought out less costly products.

 

“When we went into the recession, we saw a change in the mix of lattes versus coffee, and now we’ve seen-it’s early but we’re seeing-a trend back to lattes,” Burd said.

 

Wine is following a similar trend. While the percentage of premium wines Safeway sold declined when the recession began, sales are starting up again.

 

“Our wine category has been a fabulous category for us for years, but we saw a mixed change with a reduction in premium wines, and we’ve now seen that reverse itself,” Burd said.

 

Such changes in consumer shopping patterns “suggests to me, that we’re at, or near, the bottom of this whole thing, and that would be good for all of us if that’s true,” Burd said.

 

Safeway’s financial results, however, during the three months ended Sept. 12, were still on the downswing, evidence the economy still has a long way to go until it’s healthy again.

 

The company said it earned $128.8 million, or 31 cents a share, for the quarter, down from $199.7 million, or 46 cents, a year earlier. Revenue declined 7% to $9.46 billion.

 

Sales at stores open at least a year, a key measure of a retailer’s health, fell 3%, excluding gasoline sales, the Los Angeles Times reported.

 

“Safeway’s sales remained soft, driven largely by deflation in dairy, produce and meat, and a sluggish economy,” Burd said. “However, we are encouraged that our household and transaction counts increased in the quarter.”

 

 

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