Safeway 2007 Annual Report Download - page 27

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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 1,743 stores at year-end 2007. 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 137 food and general
merchandise stores in Western Mexico.
Blackhawk, a subsidiary of Safeway, provides third-party gift cards, prepaid cards, telecom cards and sports and
entertainment cards to a broad group of top North American retailers for sale to retail customers. Blackhawk also has gift
card businesses in the United Kingdom and Australia.
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.
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