PLEASANTON, Calif. — Any investors who are skeptical of Safeway’s chances of gaining market share won’t have to wait long to see if their assumptions are correct, Steve Burd, chairman and chief executive officer, told analysts last week.
“At the end of the day, it’s about whether or not the operating profits of this company are going to stabilize and grow and whether or not identical-store sales are going to begin to turn positive and we will gain market share.
“The good thing about all this, for those of you who are skeptical, is you do not have to wait very long to find out if you’re right. This all takes place in the third and four quarters.”
Although ID sales, excluding fuel, were flat in the first quarter, which ended March 24, Burd said they are up 1% during the last eight weeks, and he contemplates an increase to about 3% by the end of the year as a result of the chain’s marketing initiatives.
There are three initiatives in place to boost sales, he pointed out, “so if one doesn’t work, we have two others. But consider what happens if all three work.”
The three initiatives, he said, are the rollout of the “Just for U” digital platform, which will be completed companywide by mid-year; a more robust fuel program; and “a wellness play.”
“We’re working on a bunch of stuff that’s not ready for prime time yet, but we expect some of that will stimulate improvements.”
According to Burd, the promotion of Robert Edwards from chief financial officer to president will allow Burd to concentrate on boosting sales.
“Though I’m not going anywhere, I’m 62, and it makes sense to create a logical succession opportunity for the company.”
In response to a question about industry speculation, Burd said the combination of recent actions by Safeway — including Edwards’ promotion, a change in governance rules, a more aggressive stock buyback effort and the breakout of Blackhawk results — does not foreshadow any significant event in the chain’s future. “It’s just natural behavior,” he explained.
For the 12-week quarter net income rose 190% to $72.9 million, due to the impact a year ago of the decision to repatriate $1.1 billion from the company’s Canadian subsidiary; excluding that impact, net income would have been $105.3 million a year ago.
Sales rose 2.4% to $10 billion, which the company attributed to higher fuel sales, higher revenue from Blackhawk and additional sales from new stores.