SAFEWAY CUTS COSTS, EMPHASIZES TOP LINE

DAVID ORGEL

Safeway, Pleasanton, Calif., has become known for shoring up the bottom line through cost-cutting. But the company has lately placed additional emphasis on the top line.

"We're determined to have higher identical store sales," Steven Burd, president and chief executive officer, said in remarks to the Annual Food & Drug Retail Conference sponsored by Donaldson, Lufkin & Jenrette.

"By concentrating on sales for the last several months we've gotten better execution in our stores."

Burd said Safeway has identified six "breakaway sales strategies" that will help insure product innovation and better same stores sales increases.

But Burd assured investors that the company's cost-cutting focus remains. "There are future opportunities to reduce costs," he said. "The single largest opportunity lies in the supply chain. This will be an area of great focus over the next two to three years to capture savings."

Burd said Safeway has the capacity to handle additional acquisitions following a string of deals in the past few years. Safeway's geographic diversity in the U.S. is a major advantage for its competitiveness, Burd stressed. "Multi-regional operators get the benefits of globalization without global risks and language barriers," he said. Burd also predicted that Safeway's Internet commerce strategy, which is now being formulated, will be a winner. " There's a way to make money in this business, and we'll be as good in the on-line business as in the offline. And we'll be one of the two."