Safeway has had its share of publicity lately — but not the good kind. Since hedge fund Jana Partners bought a 6.2% stake in Safeway back in September, SWY has risen 20%. However, the WSJ reported that the firm announced a decrease in holdings to 4.1%; the stock slid 2% as a result.
After Jana Partners’ initial stock purchase, it suggested to Safeway that it cut some stores and return capital to investors—which the grocer is doing. The company has since exited Canada and just sold the 72 Dominick’s stores in Chicago to Roundy’s (RNDY) for $36 million, which will be rebranded as Mariano’s.
Safeway reported disappointing earnings on Oct. 10 for the third quarter 2013, and has also recently been under fire for voluntarily recalling many products. The latest were supplied by Reser’s Fine Foods or Taylor Foods found in the deli department. In September, it took Angel Food Cake products off the shelves for labeling irregularities.
Neither instance caused illness or affected shares negatively, but Safeway cannot afford to have any more dings to its brand.
Unfortunately, Kroger’s just-released third-quarter earnings report didn’t help matters at Safeway. Its stock fell another 3.3% midday Wednesday when Kroger’s earnings didn’t meet Wall Street expectations.