Profile: Safeway Inc (SWY.N)

Safeway Inc. (Safeway), incorporated on July 23, 1986, is a food and drug retailer in North America. As of December 29, 2012, the Company had 1,641 stores. The Company’s United States retail operations are located principally in California, Hawaii, Oregon, Washington, Alaska, Colorado, Arizona, Texas, the Chicago metropolitan area and the Mid-Atlantic region. Safeway’s Canadian retail operations are located principally in British Columbia, Alberta and Manitoba/Saskatchewan. In support of its retail operations, the Company has a network of distribution, manufacturing and food-processing facilities. Safeway owns and operates GroceryWorks.com Operating Company, LLC (GroceryWorks), an online grocery channel doing business under the names Safeway.com and Vons.com (collectively Safeway.com). Safeway also has a 49% interest in Casa Ley, S.A. de C.V. (Casa Ley), which operates 195 food and general merchandise stores in Western Mexico. Blackhawk Network, Inc. (Blackhawk), a subsidiary of Safeway, provides gift cards, prepaid products and payment services to consumers through a network of retail store locations in the United States, Canada, Europe, Mexico and Australia and various online channels. In addition, Blackhawk provides card production services and a secondary market for prepaid cards. In July 2012, Pope Resources, A Delaware Limited Partnership sold its headquarters building in Poulsbo, Washington to Safeway, Inc.

Safeway’s average store size is approximately 47,000 square feet. Safeway’s stores provide a range of grocery items. Most stores offer a line of food and general merchandise and feature a variety of specialty departments, such as bakery, delicatessen, floral, seafood and pharmacy. In addition, the stores offer Starbucks coffee shops, and many offer adjacent fuel centers. Safeway continues to operate a number of smaller stores that also offer a selection of food and general merchandise and that generally include one or more specialty departments. Safeway’s retail business, which represents approximately 98% of consolidated sales and other revenue, operates in the United States and Canada. Safeway is organized into 11 geographic retail operating segments (Chicago, Denver, Eastern, Northern California, Phoenix, Northwest, Texas, Vons, Alberta, Vancouver and Winnipeg). Across all 11 retail operating segments, the Company operates primarily one store format, where each store offers the same general mix of products with similar pricing to similar categories of customers.

The Company has focused its brands into three areas: Health & Wellness, Premium and Core. The Health & Wellness portfolio includes the O Organics, Eating Right, Bright Green and Open Nature brands. The Premium portfolio includes the Safeway SELECT, Signature Cafe, Rancher's Reserve, Primo Taglio, Waterfront BISTRO and Debi Lilly offerings. Waterfront BISTRO is a seafood brand. In the Core portfolio are the Safeway brands, Lucerne, Refreshe, the Snack Artist and Pantry Essentials. During the year ended December 29, 2012, the Safeway brand was subdivided into four brands: Safeway Farms, Safeway Kitchens, Safeway Home and Safeway Care. Safeway’s Canadian subsidiary has a wholesale operation that distributes both national brands and private-label products to independent grocery stores and institutional customers. Safeway has 17 distribution/warehousing centers (13 in the United States and four in Canada), which collectively provide the majority of all products to Safeway’s 11 retail operating areas. The distribution centers in Maryland and British Columbia are operated by third parties.