BMO Capital Markets analyst Karen Short says a strike at a competing supermarket chain could benefit Safeway Inc.
THE OPINION: Union employees at Raley's, a privately held supermarket chain that competes with Safeway in Northern California, went on strike Sunday. About 98 stores are involved.
Short says that Raley's is a formidable competitor and picketing generally deters customers. So Safeway, which is one of the top traditional food retailers in the area, could see stronger sales in its fourth quarter. The extent of the gain will depend on the length of the strike.
The analyst maintained an "Outperform" rating on the company's shares.
THE STOCK: Safeway shares fell 60 cents, or 3.5 percent, to $16.40 in afternoon trading amid a broader market decline. The stock has ranged from $14.73 to $23.16 in the past 52 weeks.