Safeway 2001 Annual Report Download - page 11

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Safeway Inc. (“Safeway” or the “Company”) is one of the largest
food and drug retailers in North America, with 1,773 stores at
year-end 2001.
The Company’s U.S. retail operations are located principally
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.
Safeway also has a 49% interest in Casa Ley, S.A. de C.V.
(“Casa Ley”) which operates 99 food and general merchandise
stores in Western Mexico.
In addition, the Company has a strategic alliance with
and 50% voting interest in GroceryWorks Holdings, Inc., an
Internet grocer.
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”). On the acquisition date, Genuardi’s
operated 39 stores in the greater Philadelphia, Pennsylvania area,
including New Jersey and Delaware. The Genuardi’s Acquisition
was accounted for as a purchase and was funded through the
issuance of commercial paper and debentures.
STORES Safeway’s average store size is approximately 44,500
square feet. The Company’s primary new store prototype is
55,000 square feet and is designed to accommodate changing
consumer needs, as well as achieve certain operating efficiencies.
Safeway 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.
Most stores offer a wide selection of food and general mer-
chandise and feature a variety of specialty departments such as
bakery, delicatessen, floral, pharmacy, Starbucks coffee shops and
adjacent fuel centers.
Safeway continues to operate a number of smaller stores that
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 2001:
Number Percent
of Stores of Total
Less than 30,000 square feet 307 17%
30,000 to 50,000 795 45
More than 50,000 671 38
Total stores 1,773 100%
STORE OWNERSHIP At year-end 2001, Safeway owned approx-
imately 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, expansion 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 shoppers, the
Company emphasizes high quality produce and meat, as well as
various specialty departments.
Safeway has developed a line of more than 1,250 premium
corporate brand products since 1993 under the “Safeway
SELECT” banner. The award-winning Safeway SELECT line is
designed to offer premium quality products that the Company
believes are equal or superior in quality to comparable best-sell-
ing nationally advertised brands, or are unique to the category
and not available from national brand manufacturers.
SAFEWAY INC. AND SUBSIDIARIES
Company in Review