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    Safeway Logs Positive Same Store Increases

    PLEASANTON, Calif. -- Safeway's Lifestyle strategy is apparently gaining traction among shoppers, if same-store sales figures are any indication. The chain said yesterday that comparable store sales increased 3.3 percent, and identical store sales (which exclude replacement stores) increased 2.8 percent, for the second quarter of 2005.

    PLEASANTON, Calif. -- Safeway's Lifestyle strategy is apparently gaining traction among shoppers, if same-store sales figures are any indication. The chain said yesterday that comparable store sales increased 3.3 percent, and identical store sales (which exclude replacement stores) increased 2.8 percent, for the second quarter of 2005.

    Excluding the effect of fuel sales, identical store sales increased 1.4 percent for the quarter. When adjusted for the Easter holiday, non-fuel identical store sales increased 2.6 percent, Safeway said.

    "Our strategy to differentiate our offering has resulted in broad-based sales improvement," said Steve Burd, chairman, president and c.e.o. "Consumers have responded enthusiastically to the improved quality of our perishables, to our proprietary brands, to the greater everyday value we have brought to the center of our store, and to our Lifestyle stores. We have improved non-fuel identical store sales eight of the last ten quarters and experienced two consecutive quarters of markedly positive non-fuel identical store sales, which we believe confirms the strategy is working."

    Total sales increased 4.7 percent to $8.8 billion in the second quarter of 2005, from $8.4 billion in prior year's quarter, an increase Safeway attributed to its marketing strategies and the recovery from last year's strike in Southern California.

    Net income did not fare as well. For the second quarter income was $134 million, a decrease from last year's $155.2 million.

    For the first 24 weeks of 2005, however, net revenue rose to $265.3 million compared to $198.3 million in the first half of 2004.

    In the latest half year, Safeway invested $515.1 million in capital expenditures, opening eight new Lifestyle stores and completing 83 Lifestyle remodels. So far, the company has increased expected capital expenditures to approximately $1.5 billion from $1.4 billion. The company expects to open approximately 25 new Lifestyle stores and complete approximately 290 to 295 Lifestyle remodels. By year-end 2005, approximately 25 percent of Safeway's store base will be in the Lifestyle format.

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