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Grocery Store Chain Safeway May Be Sold

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During its fourth-quarter financial earnings call on Wednesday, officials for grocery store chain Safeway announced the company was in discussions regarding a possible sale.

What’s more, Safeway is dumping its gift card business, Blackhawk Network Holdings, by distributing the remaining 37.8 million shares it owns of Blackhawk to Safeway shareholders following a Blackhawk IPO last year. Safeway may also sell its stake in Casa Ley SA, one of the largest retailers in Mexico.

Safeway reported 2013 sales of $36.1 billion, which were almost identical to 2012 sales.

According to a company release, although discussions are ongoing, the company has not reached an agreement on a sale and there are no assurances that the discussions will lead to a transaction.

Safeway owns 49% of Casa Ley S.A. de C.V. (“Casa Ley”), the fifth largest food and general merchandise retailer in Mexico based on sales. Based on Casa Ley’s improving performance, the company believes it is an appropriate time to explore alternatives to monetize its investment in Casa Ley. While the company has discussed its desire to monetize its investment with the majority owners of Casa Ley, there can be no assurance as to whether the company will be able to sell its interest in Casa Ley at a price and on terms that the company finds acceptable.

“We are pleased with the progress we made in 2013,” Robert Edwards, Safeway’s President and Chief Executive Officer, said in the release. “Strategies to grow sales and improve operating profit dollars have begun to produce results. In 2013, we generated our best volume growth since 2006, and we had our best identical-store sales growth in the last five years. At the same time, we continue to pursue strategies to enhance momentum and increase shareholder value. We look forward to continuing progress in 2014.”

Safeway officials didn’t discuss the company’s successful Just for U customer loyalty program. Last year the program accounted for about 45% of Safeway’s sales. The program offers an additional 10% to 20% savings off its Club Card, and it’s driving increased purchases from consumers jumping into the “loyal” category. Safeway officials have also seen the program grow via smartphones and tablets.

Based in Pleasanton, CA, Safeway’s Just for U customer loyalty program offers personalized discounts based on past purchases while it drives market share gains and profits. The company also runs Vons, Dominick’s, and other chains in the U.S. and western Canada.

Safeway customers can access their Just for U account at the grocer’s website and click on the personalized offers and manufacturers’ coupons they want placed electronically onto their Safeway Club Card. The tailored offers are based on a customer’s historic purchases that Safeway collects through Club Cards.

Safeway can cut prices more efficiently through its “Just for U” personalized pricing by creating special deals on those products that an individual customer buys regularly. Just for U prices are for unlimited quantities and usually last 90 days.

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