Safeway 1998 Annual Report Download - page 6

s t o res and completed construction of a new distri-
bution center in Maryland. During 1999 we plan
to invest approximately $1.2 billion and open 55
to 60 new stores while completing some 250
remodels. As in the recent past, about thre e -
q u a rters of our capital expenditures in the com-
ing year is budgeted for new stores and re m o d e l s .
Continued Growth Through Acquisitions
While improving our store system in existing
markets will remain the central focus of our capi-
tal expenditure program, our long-term gro w t h
strategy remains focused on acquisitions.
In November 1998 we acquired Dominick’s
Supermarkets, Inc., the second largest super-
market operator in the Chicago metropolitan
area with 114 stores and sales of $2.4 billion in
fiscal 1998. As with the Vons merger in 1997,
the combination with Dominick’s enables us to
extend our geographic reach and to benefit from
the exchange of best practices. Dominick’s has an
excellent reputation in the Chicago market and
operates attractive stores in good locations. We
are confident we can build on that success.
The pending acquisition of Carr- G o t t s t e i n
Foods Co., Alaska’s leading food and drug retail-
er, is expected to result in considerable synergies
for our own Alaskan operations. In support of its
49 stores, Carrs operates the state’s largest food
warehouse and freight network.
The U.S. supermarket industry, historically
highly fragmented, is becoming increasingly con-
solidated. Whereas the top five chains had a com-
bined market share of only 19% in 1992, their
s h a re had risen to 24% in
1997, should expand to
36% this year as a result
of pending mergers and,
we believe, is likely to
increase further. Growth
through acquisition will
continue to be a key part
of our strategy.
Review and Outlook
During the past six years, our total market capi-
talization has increased to approximately $29.9
billion from just $1.3 billion in 1992. No other
publicly traded supermarket chain has achieved
even half that growth rate over the same period.
Many of you have participated in this gro w t h .
As illustrated on the facing page, $1,000 invested
in Safeway stock at the beginning of 1993 had
increased in value to $18,750 by year-end 1998.
We are proud of our achievements. T h e y
reflect the dedication and hard work of 170,000
Safeway employees, many of whom are stock-
holders themselves. On their behalf, let me
a s s u re you that all of us on the Safeway team are
committed to building on our past success and
making continued progress in 1999 and beyond.
Steven A. Burd
Chairman, President and
Chief Executive Officer
March 5, 1999