By The Associated Press
Safeway Inc's shares are one of the top gainers in the market Tuesday after a BMO Capital Markets analyst upgraded her rating on the grocery chain's stock.
THE SPARK: Analyst Karen Short upgraded her rating on Safeway to "Outperform" from "Market Perform" based on a survey of the Safeway customers, which showed that the supermarket's new discounting program is working. She said the "Just for U" program is resonating with customers and is likely to help sales.
THE BIG PICTURE: Safeway is one of the nation's largest grocery chains but it has had a rocky time trying to find something to set itself apart from competitors in an increasingly competitive industry.
However, the company recently rolled out its "Just for U" program that provides personalized digital coupons for customers based on their purchase histories. The coupons can be loaded to shopper's loyalty cards and used at any Safeway store.
THE ANALYSIS: Short has long said that the company's stock would remain under pressure until it improved its sales measurements, and she says the second half of the year is looking more promising. Her firm's survey of roughly 700 customers showed that the program is working and that could help drive sales gains. As a result, she expects "the stock could finally work."
SHARE ACTION: Safeway's shares increased 52 cents, roughly 3 percent, to $16.46 by midday. Before Tuesday, its stock price had fallen nearly 44 percent from a 52-week peak of $22.95 in February.
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