Shares in US grocery chain, Safeway fell 4.5 per cent yesterday after the group revealed that the cost of its recent marketing campaign could result in flat second quarter earnings.

The campaign, which focuses on promoting fresh organic produce and own-brand products in an effort to fight competitors such as Wal-Mart and Whole Foods, is expected to cost $100m over 12 months.

Safeway reported net income of $131.3m for the first quarter, compared with $43.1m last year when sales were hit by a strike by grocery workers in Southern California.