The new Lifestyle stores have been the centerpiece of an overallstrategy that Safeway has been pursuing, and that strategy ispaying off, the company said Thursday. The Safeway Lifestyleformat, which it is implementing in a store remodeling program andalso in all of its new locations, features a decor designed to bemore inviting, with subdued lighting, an emphasis on high-qualityfresh products and, in many cases, a large selection of natural andorganic foods. Many Lifestyle stores also feature full-service meatcounters, bakeries and floral design centers as well as sushi andolive bars.

The plans for the new Lifestyle stores in 2007 follow thecompany's opening of 17 new Lifestyle stores and completion of 276Lifestyle remodels during 2006, a year in which the company alsoclosed 31 stores. In the conference call Thursday, Safeway chairmanand president Steve Burd credited the new stores with contributingto improved financial results for the quarter and for the year.

For the fourth quarter ended Dec. 31, the company reported netincome of $307.9 million, or 69 cents per diluted share, comparedwith net income of $173.5 million and 39 cents per diluted sharefor the fourth quarter ended Dec. 31, 2005. Total sales increased3.8% to $12.5 billion in the fourth quarter, with contributionsfrom Lifestyle stores and strong perishable and non-perishableperformance drove this increase. Identical-store sales, includingand excluding fuel, increased 3.5% in the fourth quarter.