Safeway Outlines Growth Vehicles

Pleasanton, Calif. Safeway said on Thursday that it will introduce three new growth vehicles to drive 2008 earnings: experimenting with a new store format, monetizing two of its exclusive product lines and leveraging its health care knowledge, according to a report on supermarketnews.com.

Speaking at an investors conference, Steve Burd, chairman, president and CEO, did not specify what the new format would be, but called it “an experiment, not a launch.” Previous published reports said the chain was seeking sites for stores of 20,000 sq. ft. each in the San Jose area in Northern California. Some analysts speculated the smaller footprint represented Safeway’s response to Tesco’s Fresh & Easy format.

Burd said Safeway also plans to offer its O Organics and Eating Right product lines to other outlets. The third growth initiative would harness knowledge Safeway has accumulated over several years to reduce health care costs by encouraging people to alter individual behavior.

Burd said two of the three new vehicles should make money in 2008, “and they could contribute as much as 10% to 12% of earnings per share over five years.”