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    Safeway's Burd to Suppliers: Lower Prices of We'll Push Private Label

    The success of the retailer's corporate brand program could be a threat to national brands.

    Safeway chairman, president and CEO Steve Burd yesterday told analysts during its earnings conference call yesterday that the company will push more of its private label products -- such as its popular O Organic line -- if manufacturers don't lower their prices.

    Still, the retailer saw increased sales for the 17-week fourth quarter of 2008. Total sales increased 3.4 percent to $13.8 billion, up from $13.4 billion in 2007 -- driven by the additional week in 2008 and identical-store sales increases, excluding fuel, of 0.4 percent, partly offset by a decrease in the Canadian exchange rate and lower fuel sales.

    "Despite a difficult economic environment, our efforts to control costs helped increase fourth-quarter earnings per share by 16 percent over last year," said Burd. "In addition, we increased annual free cash flow 62 percent to $681 million. We are stepping up our efforts to provide increased value to our customers by lowering prices on everyday items, while continuing to provide quality perishables and great service."

    Net income for the retailer was $338 million (79 cents per share) compared to 2007's $301.1 million (68 cents per share) for the 16-week fourth quarter of 2007.

    Safeway's sales for the year increased 4.3 percent to $44.1 billion, up from $42.3 billion in 2007, driven by increased fuel sales and identical-store sales increases, excluding fuel, of 0.8 percent.

    Net income for the 53-week year 2008 was $965.3 million ($2.21 per share) up from $888.4 million ($1.99 per share) in the 52-week year 2007.

    During 2008, Safeway invested $1.5 billion in capital expenditures, opened 20 new Lifestyle stores, completed 232 Lifestyle remodels and closed 24 stores. In 2009, the company expects to spend approximately $1.2 billion in capital expenditures, open approximately 10 new Lifestyle stores and complete approximately 135 Lifestyle remodels.

    Safeway operates 1,739 stores in the United States and Canada.

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