Safeway 2000 Annual Report Download - page 16

Safeway Inc. and Subsidiaries
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Safeway Inc. (“Safeway” or the “Company”) is one of the
largest food and drug retailers in North America, with 1,688
stores at year-end 2000.
The Company’s U.S. retail operations are located princi-
pally in California, Oregon, Washington, Alaska, Colorado,
Arizona, Texas, the Chicago metropolitan area and the Mid-
Atlantic region. The Company’s Canadian retail operations
are located principally in British Columbia, Alberta and
Manitoba/Saskatchewan. In support of its retail operations,
the Company has an extensive network of distribution,
manufacturing and food processing facilities.
During 2000, the Company invested $40 million cash
and entered into strategic alliance and grocery supply
agreements with GroceryWorks.com, an internet grocer.
In addition, Safeway has a 49% interest in Casa Ley, S.A.
de C.V. (“Casa Ley”) which operates 97 food and general
merchandise stores in western Mexico.
ACQUISITION OF GENUARDI’S FAMILY MARKETS, INC.
(“GENUARDI’S”)In February 2001, Safeway acquired all of
the assets of Genuardi’s for approximately $530 million in cash
(the “Genuardi’s Acquisition”). The Genuardi’s Acquisition
will be accounted for as a purchase and was funded through
the issuance of commercial paper and debentures.
Genuardi’s operates 39 stores in the greater Philadelphia,
Pennsylvania area, including New Jersey and Delaware, and
had annualized sales of approximately $1 billion prior to
the acquisition.
STORES Safeway’s average store size is approximately 44,000
square feet. Safeway’s primary new store prototype is
55,000 square feet and is designed both to accommodate
changing consumer needs and to achieve certain operating
efficiencies. The Company determines the size of a new
store based on a number of considerations, including the
needs of the community the store serves, the location and
site plan, and the estimated return on capital invested.
COMPANY IN REVIEW
Most stores offer a wide selection of both food and gener-
al merchandise and feature a variety of specialty departments
such as bakery, delicatessen, floral and pharmacy.
Safeway continues to operate a number of smaller stores
which also offer an extensive selection of food and general
merchandise, and generally include one or more specialty
departments. These stores remain an important part of the
Company’s store network in smaller communities and certain
other locations where larger stores may not be feasible because
of space limitations and/or community needs or restrictions.
The following table summarizes Safeway’s stores by size at
year-end 2000:
Number Percent
of Stores of Total
Less than 30,000 square feet 318 19%
30,000 to 50,000 784 46
More than 50,000 586 35
Total stores 1,688 100%
STORE OWNERSHIP At year-end 2000, Safeway owned
approximately one-third of its stores and leased its remaining
stores. In recent years, the Company has preferred ownership
because it provides control and flexibility with respect to
financing terms, remodeling, expansions and closures.
MERCHANDISING Safeway’s operating strategy is to provide
value to its customers by maintaining high store standards
and a wide selection of high quality products at competitive
prices. To provide one-stop shopping for today’s busy shop-
pers, the Company emphasizes high quality produce and
meat, as well as specialty departments, including in-store
bakery, delicatessen, floral and pharmacy.