A Jefferies and Co. analyst said Monday that he had found a recurring problem of understaffing and subpar cleanliness at Safeway stores he visited in Southern California.
"Out-of-stocks and understocking were pervasive," analyst Scott Mushkin told investors in a research report. "It is hard to sell items that are not there."
Mushkin noted problems such as empty displays, inventory left in the aisles, disorganized shelves and fruit on the floor. He said understaffing appeared to be contributing to the issues.
The analyst said that management has indicated these conditions are unacceptable and would be corrected.
"The company believes that the problems are not seen throughout the chain and generally resulted from poor ordering and insufficient labor hours as produce sales remain strong," Mushkin said.
Still, Mushkin kept a "Buy" rating on the shares. He said the stock has traded below its historical averages for more than a year, creating a buying opportunity.
Efforts to immediately reach a company spokesman were unsuccessful.
Safeway shares closed Friday at $19.47.
