Safeway sees operating profits growing 'nicely' | July 6, 2012 | Pleasanton Weekly | |

Pleasanton Weekly

- July 6, 2012

Safeway sees operating profits growing 'nicely'

Business prospects continue to improve, senior VP tells investors

Pleasanton-based Safeway expects operating profits to "grow nicely going forward" as a result of a refinancing plan and other ongoing initiatives, the chain's senior vice president, finance and investor relations told Supermarket News last week.

Melissa Plaisance told the trade publication in an interview that Safeway believes the temporary shift in financial policy it initiated last November -- using incremental leverage for share repurchases at very low interest rates -- will enable the company to grow operating income over the next three years, at which point debt ratios will return to the levels they were at late last year.

Safeway adopted the temporary shift because stock prices were at a five-year low, she explained.

Supermarket News said Plaisance's call with investors was arranged on short notice. Plaisance explained that her remarks were "in response to a number of inquiries in the last week" regarding the temporary shift in financial policy and a floating-rate note debt issuance.

"We expect to see operating profit grow nicely going forward as a result of our Just for U (digital) rollout, our work with corporate brands, our investment in natural lines like Open Nature, our fuel rewards and other loyalty programs and our health and welfare initiatives," she told Supermarket News.

"We believe the prospects for our business continue to improve, and with the low stock price and the low interest rates, we are confident in the (temporary financial) plan and working hard to bring it to fruition by the end of 2013," she added.

According to the trade journal, Safeway refinanced its $800 million debt due Aug. 15 at the same time it began buying back shares.

Plaisance said Safeway anticipates reducing debt through the balance of the year.

"Our year-end debt balance should be lower by a significant amount than in the first half of this year," she told investors.


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