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PLEASANTON, Calif. - Safeway chairman, president, and c.e.o. Steve Burd continues to keep the industry guessing as to what life after Lifestyle - its successful upscale format -- will be like for the retailer as it passes the halfway point in a chain-wide conversion to the concept.
While Safeway had hinted at acquisitions during its May investors conference, as well as at a Bank of America conference two months prior, Burd said yesterday the retailer is once again hot on growing Blackhawk, its card business, in the near future.
"I do think that acquisitions are a logical thing for us to do in the future," said Burd during yesterday's earnings conference call. "We are not really confined in terms of being this growth story to doing acquisitions. We have Blackhawk now, which is a high growth entity.
"I committed I think a year ago at the investor conference that we would create other high growth vehicles, and so the beauty of Blackhawk is it requires little or no capital," Burd continued. "And so part of our effort to find new growth engines is to look for things that don't have the capital intensity of the supermarket business. It's a much better balancing act. Why go into multiple capital intensive businesses?"
Regardless of which route Safeway finally chooses, Burd assured investors that the company will continue the success it has demonstrated during the past several years.
"This is also the third consecutive quarter in which all ten operating areas of the company have had positive IDs," said Burd. "Not surprisingly, our market share in the supermarket channel continues to grow and has now increased for the 11th consecutive quarter."
Sales for the retailer were $9.8 billion for the third quarter of 2007, an increase of 3.9 percent from last year's $9.4 billion. Excluding the effect of fuel sales, comparable-store sales increased 3.2 percent and identical-store sales increased 3 percent.
Net income was $194.6 million, or 44 cents per share for the third quarter ended September 8, 2007, up 13 percent from last year's $173.5 million, or 39 cents per share.
Net income for the first 36 weeks of 2007 was $587.2 million, or $1.32 per share, up from $562.6 million, or $1.25 per share for 2006.
Safeway invested $1.2 billion in capital expenditures in the first 36 weeks of 2007, opening six new Lifestyle stores, completing 158 Lifestyle remodels, and closing 29 stores. For the year, the company expects to spend approximately $1.7 billion in capital expenditures, open approximately 20 new Lifestyle stores and complete approximately 260 Lifestyle remodels.
Safeway operates 1,738 stores in the United States and Canada and had annual sales of $40.2 billion in 2006.