NEW YORK (Reuters) - Shares of No. 3 U.S. grocer Safeway Inc. (SWY.N) sank to a new six-year low on Monday after unionized workers at its Dominick's unit in Chicago authorized a strike and an analyst said the retailer's reduced 2003 profit outlook has removed any reason for the stock to rise.þþSafeway fell nearly 6 percent Monday morning, extending a slide that began on Friday when it forecast a bleak fourth-quarter and 2003 profit outlook.þþThe grocer, which is based in Pleasanton, California, blamed a softer U.S. economy for hurting sales growth as customers turn to discounters like Wal-Mart Stores Inc.for cheap food.þþGoldman Sachs analyst John Heinbockel said in a research note he expects Safeway shares to ``tread water over the next six months'' since the company's reduced outlook has robbed the shares of any near-term upside catalyst.þþA vote on Sunday authorizing a strike at Safeway's struggling 113-store Dominick's chain also weighed on the retailer's shares.þþSome 80 percent of Dominick's 9,000 unionized workers voted to reject a company contract offer and authorize a strike, Elizabeth Belan, a spokeswoman for the United Food and Commercial Workers International Union's Local 881, told Reuters late on Sunday.þþSafeway executives said on a Friday investor conference webcast they had to bring down health-care and wage costs to guarantee the company's survival and that of Dominick's.þþThey said Dominick's operated at a cost disadvantage to its largest Chicago market rival, Jewel chain -- owned by No. 2 U.S. grocer Albertson's Inc.Chief Executive Steve Burd said Safeway -- which ranks behind industry leader Kroger Co. (KR.N) and Albertson's -- would not budge on union demands and reiterated a warning that Safeway would not try to operate the Chicago chain if workers there went on strike. Safeway's contract with Dominick's workers expired on Saturday.þþBurd added that Safeway could even liquidate the division in the event of a strike. Analysts have speculated that the union tussle may be precursor to an eventual pullout as Chicago was a tough market for Safeway.þþSafeway shares traded at $18.90, down $1.11, on the New York Stock Exchange. The stock earlier fell as low as $18.45 immediately after the market open. þþþ
Source: NY Times
