Safeway chairman, president and CEO Steve Burd, commenting in aconference call with financial analysts, noted that some skepticswondered if the Lifestyle stores would be able to hold their salesgains in their second and third years of operations. The Lifestyleformat has not only held its gains, it has built on them, Burdsaid, crediting the new format with helping to increase sales atthe chain as part of the chain's overall "re-energizingstrategy."

Safeway operates 1,755 stores in the US and Canada. In additionto its plans to open more Lifestyle stores, the company plans tocontinue remodeling existing stores into the Lifestyle format. Forthis fiscal year, it expects to complete approximately 275Lifestyle remodels. The company invested $385.9 million in capitalexpenditures in the first quarter as part of a plan to spendapproximately $1.7 billion in capital expenditures for the newopenings and remodelings this fiscal year.

Safeway's net income for the first quarter totaled $174.4million and 39 cents per diluted share, compared with $142.9million and 32 cents per diluted share for the first quarter oflast year. Total sales and other revenue increased 4.8% to $9.3billion in the first quarter, compared to $8.9 billion in the firstquarter of 2006. Identical-store sales increased 4.8% for thequarter and "were strong in both perishable and non-perishableproducts," Burd pointed out.