Safeway 2011 Annual Report Download - page 23

SAFEWAY INC. AND SUBSIDIARIES
• Loss of a key member of senior management;
• Data security or other information technology issues that may arise;
• Unanticipated events or changes in real estate matters, including acquisitions, dispositions and impairments;
• Adverse weather conditions and effects from natural disasters;
• Performance in new business ventures or other opportunities that we pursue; and
• The capital investment in and financial results from our Lifestyle stores.
We undertake no obligation to update forward-looking statements to reflect new information, events or developments
after the date hereof. For additional information regarding these risks and uncertainties, see “Item 1A. Risk Factors.”
These are not intended to be a discussion of all potential risks or uncertainties, as it is not possible to predict or identify all
risk factors.
PART I
Item 1. Business
General The Company began operations in 1926. In July 1986, Safeway was incorporated in the state of Delaware 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. The Company’s fiscal year ends on the Saturday nearest December 31. The
last three fiscal years consist of the 52-week period ended December 31, 2011 (“fiscal 2011” or “2011”), the 52-week
period ended January 1, 2011 (“fiscal 2010” or “2010”) and the 52-week period ended January 2, 2010 (“fiscal 2009”
or “2009”).
Safeway Inc. is one of the largest food and drug retailers in North America, with 1,678 stores at year-end 2011. The
Company’s U.S. retail operations are located principally in California, Hawaii, 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 owns and operates GroceryWorks.com Operating Company, LLC (“GroceryWorks”), an online grocery channel
doing business 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 185 food and general
merchandise stores in Western Mexico.
Blackhawk Network, Inc. (“Blackhawk”), a majority-owned subsidiary of Safeway, provides prepaid products and
payment services to consumers through a network of retail store locations in the United States, Canada, Europe, Mexico
and Australia and various online channels. Prepaid products include: closed loop (private branded) cards, open loop
(network branded) cards, financial services products and telecom products. Additionally, Blackhawk provides card
production services, a secondary market for prepaid cards and has recently introduced digital wallet services.
Stores Safeway’s average store size is approximately 47,000 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 “Lifestyle” store showcases the Company’s commitment to
quality with an expanded perishables offering. It features 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 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, seafood
and pharmacy. In addition, the majority of stores offer Starbucks coffee shops, and many offer adjacent fuel centers.
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