Safeway 2006 Annual Report Download - page 14

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12
Going forward, we expect to sustain profi table
growth from ongoing innovation in our core
business while creating and developing new
growth engines. We fi rmly believe this dual-track
path will lead to long-term earnings growth.
Core business opportunities
We plan to continue growing by maintaining
clear, compelling points of difference between
our offerings and those of our competitors. In
executing our differentiation strategy, we expect
to further distance ourselves from conventional
supermarket operators and capture additional
business from other channels.
We base this positive outlook on several favor-
able factors. With less than half of our store
system converted to the highly successful
Lifestyle format, we expect our aggressive
remodeling program to generate strong same-
store sales gains for several years. We also
should benefi t from ongoing improvements
in our perishables and corporate brands,
continuous innovation and outstanding customer
service. In addition, we envision signifi cant cost-
reduction through shrink control, supply chain
effi ciencies, previously restructured labor con-
tracts, reengineering and other operational
improvements that will enable us to invest in
price and enhance margins in the years to come.
New growth opportunities
Over time, we expect to realize signifi cant
incremental gains in sales and profi ts from new
growth opportunities. Our subsidiary Blackhawk
Network, which began business operations in
2001, is the fi rst visible effort in this regard.
With a network of more than 60,000 stores
reaching 135 million consumers each week,
Blackhawk is the largest provider of third-party
gift cards in North America. It provides cards to
a broad group of top retailers, offering more
than 185 brands from companies such as The
Home Depot®, Gap, Nordstrom and Bed Bath
& Beyond®. Blackhawk also distributes prepaid
cards for American Express®, MasterCard® and
Visa® issuers, and it offers sports and entertain-
ment cards for a host of venues.
In addition to prepaid cards, several other pro-
mising initiatives are currently under development.
Since its inception, Blackhawk has grown the
face value of cards sold at an annual rate of
more than 100%. In 2006 it opened a London
offi ce and began distributing gift cards in the
UK, the fi rst step in international expansion.
Sustaining
long-term growth