NEWS WATCH: SAFEWAY SETTLES 2003 SHAREHOLDER LAWSUIT... KROGER SETS 2005 EXECUTIVE BONUS TARGETS... STUDY SAYS U.S. DISCOUNTERS HAVE ROOM TO GROW...

SAFEWAY SETTLES 2003 SHAREHOLDER LAWSUIT

aid last week it has agreed to a settlement of a 2003 lawsuit that charged chain officials and directors with concealing information about the company's poor performance in some divisions to enable those individuals to sell shares of Safeway stock at inflated prices. The company said it has agreed to implement certain corporate governance enhancements, while the shareholders who filed the complaint agreed to dismiss all claims with prejudice. The memorandum is subject to execution of a definitive stipulation of settlement and approval by the California Superior Court for the County of San Mateo. The complaint alleged breach of fiduciary duty, abuse of control and violations of the California Corporations Code by the chain's directors and two corporate officials; by Safeway investor Kohlberg Kravis Roberts & Co.; and by the company itself.

KROGER SETS 2005 EXECUTIVE BONUS TARGETS

CINCINNATI -- Top executives of Kroger here can reach annual bonuses based on equal achievements in sales, earnings and strategic initiatives, according to a filing with the Securities and Exchange Commission. Kroger's bonus is based 30% on identical-store sales performance; 30% on earnings before interest, taxes depreciation and amortization; and 30% on strategic plan implementation. Ten percent is based on the success of capital projects like new and expanded stores reaching sales and earnings goals. If the company hits its targets this year, Chief Executive Officer David Dillon could earn a bonus of $1.4 million. Kroger executives achieved approximately 55.2% of their targeted bonuses during 2004, the filing said.

STUDY SAYS U.S. DISCOUNTERS HAVE ROOM TO GROW

LONDON -- Despite being some of the fastest-growing retail businesses in the United States, grocery discounters and dollar stores have a long way to go here before they match the penetration of their counterparts in Europe, a new study from Planet Retail here said. Discount retailers in the United States control just 1.7% of the U.S. retail market, vs. more than 6% in France and nearly 30% in Germany, the study said. The top-five leading discount chains -- which the study identified as Dollar General, Family Dollar, Save-A-Lot, Aldi and Dollar Tree -- will not collectively account for 5% of the retail market until 2020, Planet Retail added.

SHAREHOLDERS APPROVE KMART-SEARS MERGER

HOFFMAN ESTATES, Ill. -- Shareholders of Kmart and Sears voted last week in favor of Kmart's $11 billion takeover of Sears. The combined company, known as Sears Holdings, becomes the fourth-largest U.S. retailer with $55 billion in annual sales and 3,800 stores. The company will be based at Sears headquarters here.

SMART & FINAL EXTENDS SUPPLY PACT WITH UNIFIED

LOS ANGELES -- Smart & Final here said last week it has extended its supply agreement with Unified Western Grocers to supply the company's 48 Cash & Carry stores in Northern California and the Pacific Northwest. The new agreement extends an existing deal through 2008, with a two-year extension option. UWG, also based here, will supply food products, perishables and dry goods, and provide support services to Cash & Carry stores, Smart & Final said.

WAL-MART ANNOUNCES CANADA STORE ADDITIONS

MISSISSAUGUA, Ontario -- Wal-Mart Canada here said last week it would open between 25 and 30 new stores in Canada during 2005. The new stores will be discount department stores, a Wal-Mart spokesman told SN. The company also announced it would make a donation of $300,000 to establish a fund to help community groups preserve green space, restore natural habitats, and create community gardens in urban and urbanizing areas. The program, Green Grants, will donate up to $10,000 to local groups and will be administered by Evergreen, a national not-for-profit organization.