Safeway’s Small Format ‘Good, not Great’

ELLIOT ZWIEBACH

PLEASANTON, Calif. — Results from Safeway’s test of a small-store format in Long Beach, Calif., that opened in May have been "good but not great,” Steve Burd, Safeway’s chairman, president and chief executive officer, told the chain's investors conference here.

The company plans to open two more small-format stores next year, including at least one that will be ground-up, "but unless the results go from good to great and we feel we can open 30 to 50 of these per year, it won't make enough difference for these stores to be more than an experiment," he added.

Burd also said Safeway expects to survive the recession in better shape than some of the price operators who are thriving now. "Recessions are temporary, and strong companies weather the downturns better than weaker companies," he said. "Some people on Wall Street have questioned whether we have the right strategy for a recession. But we believe you build a strategy to create long-term shareholder value, not to deal with a recession.”

He said Safeway projects 2009 earnings per share of $2.34 to $2.44 and non-fuel ID sales growth of 2% to 3%, "and we believe that, despite all the price investments we plan, we will still be able to expand operating margins."

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