Safeway Earns $203M

The profit for the 16-week fourth quarter of 2004, 45 cents per share, compared with a net loss of $695.9 million, or $1.57 per share, in the 17-week fourth quarter of 2003. The results were "largely as expected," according to Steve Burd, chairman, president and CEO.

Burd commented during the company's conference call Thursday that all of Safeway's new stores and remodelings this year will be in its new lifestyle format, which it has been implementing as part of a program that Safeway calls "reinventing" itself. In 2005, the company expects to spend approximately $1.4 billion to open approximately 30 to 35 new lifestyle stores and complete approximately 275 to 285 lifestyle remodels. As it stands now, Burd pointed out, the company has about 142 lifestyle stores, so the 2005 additions and remodelings will triple the number of lifestyle stores in the chain to about 450 by the end of the year. During 2004, the company opened 33 new lifestyle stores, completed 94 lifestyle remodels and closed 48 stores.

Burd also pointed out that the 2004 quarterly and full year results still reflect the Southern California supermarket strike. "While the strike is behind us, there are some lingering effects," he said. "It will take us probably until sometime in 2006 to completely recover from the effects of the strike." For example, the company said net income for the fourth quarter of 2004 included a charge of approximately $47.2 million, after tax, or 11 cents per share, that it attributed to the estimated impact from the strike and from contributions to a Northern California union health and welfare plan. Excluding these items, fourth-quarter 2004 earnings would have been 56 cents per share, the company said. However, primarily as a result of the gradual recovery from the strike and increased fuel sales, Safeway's sales for the fourth quarter increased to $11.4 billion, compared with $11 billion in the one week longer quarter of 2003.

For the full year, the company reported net income of $560.2 million, or $1.25 per share, versus a loss of $169.8 million, or 38 cents per share, for 2003. Sales increased only slightly to $35.8 billion in 2004 from $35.7 billion in 2003, primarily because of the strike and because fiscal 2004 had one week less than fiscal 2003. The company ended the year with 1,802 stores in the United States and Canada.