Safeway expects to eventually convert all of its 1,767 stores to the concept, which offers shoppers a more upscale atmosphere, organic goods and special, proprietary brands. Safeway reported a net income of 173.5 million, or 39 cents a share for the quarter, an increase of $51 million over the $122.5 million or 27 cents a share, earned in the third quarter of last year.

Sales for the period increased 5.3% to $9.4 billion, up from $8.9 billion in sales during the third quarter of 2005. Sales at stores open at least a year were also up 5% for the quarter. Excluding fuel sales, same store sales were up 3.7%.

The company said it expects same store sales for non-fuel stores to range from 3.1% to 3.3% for the year, an increase in its earlier 3% projection. Safeway said it is also "comfortable" with its 2006 earnings estimate of $1.72 per share.

Driving the third quarter increase was strong sales at its lifestyle stores, strong performance in perishable and non-perishable items and increased fuel sales, the Pleasanton, CA company said.

"We would characterize this quarter as another very good quarter for us, leading to what we believe will be a strong performance on the year." Steve Burd, Safeway's chairman, president and chief executive officer told investors and analysts in a conference call.

Burd says it was the seventh consecutive quarter that Safeway has had gains in market share. The results follow an 84% gain in second-quarter profit and a $174.9 million gain in net income for the first36 weeks of 2006.