Fitch Affirms Safeway Ratings

SN STAFF

NEW YORK — Fitch Ratings here on Wednesday said it affirmed its ratings on Safeway, saying the retailer's strong market shares and cost reduction efforts are helping to withstand competitive pressures and a challenging economic environment.

Fitch rates Safeway's default rating as "BBB" with a stable outlook. The Pleasanton, Calif.-based retailer has about $5.3 billion in outstanding debt.

"The ratings reflect Safeway's broad geographic presence and strong positions in its key markets, cost reduction efforts, strong cash flow generation and steady credit metrics," Fitch said in a statement. "The ratings also consider the economic environment and intense competition in the sector which are expected to continue to exert pressure on sales and operating profitability."

Safeway has shown negative identical-store sales over the last seven quarters, but Fitch noted trends were improving and volumes were flat over the two most recent periods following the completion of heavy price investments during 2009.