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    Safeway Sees Strong Q4 Gains on Loyalty Programs

    Popular Just for U loyalty program launched last year

    Safeway’s new just for U loyalty program and fuel loyalty programs are driving strong results for the retailer, including increases in marketshare and profits, the grocery chain announced during its fourth quarter earnings conference call earlier today.

    "We are pleased with our results for the quarter," said Steve Burd, Safeway's chairman and CEO. "While the calendar shift of New Year's Eve and the shift to generic drugs had a significant drag on reported ID sales, our just for U and fuel loyalty programs are driving market share gains and profits."

    Sales and other revenue increased 1.2 percent to $13.8 billion for the fourth quarter of 2012, due to higher gift and prepaid card sales and a 0.8 percent increase in identical-store sales, excluding fuel, partly offset by the disposition of the Genuardi's stores. Safeway's fiscal year 2011 ended on Dec. 31, 2011, and therefore captured New Year's holiday sales. Safeway's fiscal year 2012 ended on Dec. 29, 2012, and therefore did not.

    In January 2012, Safeway announced the planned sale or closure of its Genuardi's stores located in the eastern United States. In the fourth quarter of 2012, these transactions were completed with a pre-tax loss of $15.8 million ($9.6 million, after tax). For the year, the sale and closure of Genuardi's stores generated cash proceeds of $107 million and a pre-tax gain of $52.4 million ($31.9 million after tax).

    Sales for the year increased 1.3 percent to $44.2 billion in 2012 from $43.6 billion in 2011. This increase was primarily due to increased fuel sales, higher gift and prepaid card sales and an identical-store sales increase (excluding fuel) of 0.5 percent, partially offset by the disposition of the Genuardi's stores.

    Net income for fiscal 2012 increased to $596.5 million ($2.40 per share) from 2011’s $516.7 million ($1.49 per share). Income from continuing operations increased to $566.2 million ($2.27 per share) in 2012 from $518.2 million ($1.49 per share) in 2011. Net income in 2012 benefited from the $46.5 million gain ($28.4 million after tax, or 12 cents per diluted share) from legal settlements while net income in 2011 was reduced by the $98.9 million tax charge 29 cents per share from the Canadian dividend paid in the first half of 2011.

    Safeway invested $240.4 million in capital expenditures in the fourth quarter of 2012, opening three new Lifestyle stores, completing two Lifestyle remodels and closing six stores. For the year, Safeway invested $927.6 million in capital expenditures, opened nine new Lifestyle stores, completed four Lifestyle remodels and closed 46 stores, including 25 Genuardi's stores sold or closed during the year.

    Pleasanton, Calif.-based Safeway operates 1,641 stores in the United States and Canada.

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