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Safeway to Invest $1.6 Billion in Growth Next Year

PLEASANTON, Calif. -- Safeway Inc. plans make approximately $1.6 billion in cash capital expenditures in 2006, to complete 20-25 new stores and remodel approximately 280 stores, the company said during its investor conference yesterday.

In addition, the retailer said it expects to generate free cash flow next year in the range of $400 million to $600 million.

"In 2006, we will continue to serve our customers with the highest quality produce, meat, bakery and deli items, offering them great selection and value throughout the store, including a revitalized corporate brand," said Steve Burd, chairman, president, and c.e.o. yesterday. "We plan to rapidly roll out additional Lifestyle stores which give our shoppers a more comfortable shopping environment. Finally, we expect to realize improvements in our cost structure as a result of restructured labor contracts and an improved supply chain that will allow us to compete effectively in the marketplace and improve shareholder value."

Safeway set earnings per share guidance for the coming year at $1.55 - $1.65, which includes an estimated 7 cents per share of stock option expense for the year. The company said it anticipates continued strong contributions from Lifestyle stores, benefits from restructured labor contracts, and an improved supply chain to enhance profitability in 2006. It said it also expects to generate non-fuel identical store sales growth of approximately 3 percent in 2006.

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