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Safeway Reports Major Fourth-quarter Loss

PLEASANTON, Calif. - Safeway Inc. today reported a net loss of $695.9 million ($1.57 per share) for the 17-week fourth quarter ended Jan. 3, 2004. The grocery retailer's results were affected by the impact of the ongoing Southern California strike, which Safeway estimates to be $0.23 per share, and the impact of the non-cash charges, which reduced earnings by a total of $2.00 per share. Excluding these items, earnings were $0.66 per share.

"Overall, we are pleased with the operating results that we achieved in the quarter despite a challenging environment," said Steve Burd, chairman, president and c.e.o. of Safeway. "During the year we steadily improved overall same-store sales in non-strike affected areas, generated free cash flow of $815 million and reduced debt by $613 million. Additionally, we met the earnings guidance set forth at our analysts meeting on December 4, 2003, which excluded the strike impact and the non-cash charges discussed below."

Total sales increased to $11.0 billion from $10.7 billion in the fourth quarter of 2002, primarily due to the additional week in 2003, new store openings and additional fuel sales, partly offset by the impact of the strike.

Excluding the estimated effects of the Southern California strike, fourth-quarter 2003 comparable store sales increased 1.1 percent while identical store sales (which exclude replacement stores) rose 0.7 percent. Excluding the effect of fuel sales and the strike, comparable store sales declined 0.4 percent and identical store sales declined 0.8 percent. These same-store comparisons are based on 17-week periods for the fourth quarter of each year.
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