Safeway 2006 Annual Report Download - page 23

SAFEWAY INC. AND SUBSIDIARIES
PART I
Item 1. Business
General Safeway was incorporated in the state of Delaware in July 1986 as SSI Holdings Corporation and,
thereafter, its name was changed to Safeway Stores, Incorporated. In February 1990, the Company changed its name
to Safeway Inc.
Safeway Inc. is one of the largest food and drug retailers in North America, with 1,761 stores at year-end 2006. 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.
In 2006 a subsidiary of Safeway purchased the remaining minority interests in GroceryWorks Holdings, LLC, the parent
company of Safeway’s online grocery channel, GroceryWorks.com Operating Company, LLC (“GroceryWorks”).
GroceryWorks operates under the names Safeway.com, Vons.com and Genuardis.com (collectively “Safeway.com”).
Safeway also has a 49% ownership interest in Casa Ley, S.A. de C.V. (“Casa Ley”) which operates 127 food and
general merchandise stores in Western Mexico.
Blackhawk, a subsidiary of Safeway, provides third-party gift cards, prepaid cards, and sports and entertainment cards
to Safeway, as well as to a broad group of top North American retailers for sale to retail customers. Blackhawk has
recently expanded its gift card business to the United Kingdom.
Stores Safeway’s average store size is approximately 46,000 square feet. 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. Safeway’s primary new store format, called the “Lifestyle”
store, is typically 55,000 square feet but can vary depending on the factors stated above. Lifestyle stores showcase the
Company’s commitment to quality with an expanded perishables offering. They feature an earth-toned décor package
that is warm and inviting with special lighting to highlight products and departments, custom flooring and unique
display features. The Company believes this warm ambience significantly enhances the shopping experience.
Safeway’s stores provide a full array of dry grocery items tailored to local preferences. Most stores offer a wide
selection of food and general merchandise and feature a variety of specialty departments such as bakery, delicatessen,
floral and pharmacy. In addition, many stores now offer 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 that 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 2006:
Square footage
Number
of stores
Percent
of total
Less than 30,000 251 14%
30,000 to 50,000 758 43
More than 50,000 752 43
Total stores 1,761 100%
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