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Safeway Spends to Grow

PLEASANTON, CA-The supermarket chain plans to spend $1.6 billion in capital expenditures in 2006, in part to open 20 to 25 new stores.

By Bob Howard | Updated on December 15, 2005

PLEASANTON, CA-Safeway plans 20 to 25 new stores next year, along with remodeling about 280 units, executives said Wednesday at a conference for financial analysts and institutional investors outlining the retailer’s expansion plans and reviewing its performance this year. One of the linchpins of the company’s plans for growth and greater efficiency is its “Lifestyle” stores, the new format that Safeway unveiled last year, which involves remodeling existing stores building Lifestyle formats whenever it opens a new store.

Steve Burd, Safeway’s chairman, president and CEO, said in the investor conference that its Lifestyle stores are “23% more productive, in terms of top-line sales growth, than similar remodels” the company has completed at similar costs-per-store in the past. “I think some people were concerned that as we moved through time we would move through the best projects and we would have deterioration in either sales or return on investment, but both of those have actually improved,” Burd said.

Safeway plans to spend approximately $1.6 billion in capital expenditures in 2006 to complete the 20 to 25 new stores and the 280 remodeling jobs. That will follow a ramped-up expansion this year in which the company has been converting as many stores as possible to the Lifestyle format. Burd noted that Safeway has 146 construction completions scheduled in this year’s fourth quarter.

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