Safeway 2005 Annual Report Download - page 14

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12 SAFEWAY INC. 2005 ANNUAL REPORT
20
124
20052003 2004
LIFESTYLE STORES
New and Remodeled Each Year
300
250
350
200
150
100
50
0
314
During 2005, we completed the restructuring of all of
our labor contracts to enable us to compete effectively
Aggressive Rollout of Lifestyle Stores
Our Lifestyle stores continue to enjoy exceptionally
strong top-line growth, contributing significantly to
the resurgence of our sales momentum. In conjunction
with our aggressive remodeling program, stores
converted to the Lifestyle format in 2005 were even
more productive than 2004 Lifestyle conversions, which
had significantly outperformed the conventional store
remodels of the previous five years.
Following the Lifestyle concept’s inception as an
experimental prototype in 2003, we converted 8% of
our total store base to this format just a year later.
With the completion of another 314 new or remodeled
Lifestyle stores in 2005, the conversion rate rose even
more rapidly, to 26% of our store base. By the end of
2008, we expect it to reach approximately 77%.
These stores are dramatically redesigned with earth-
toned décor, subdued lighting, custom flooring, unique
display fixtures and other special features to impart a
warm ambience that we believe significantly enhances
the shopping experience.
Lowering Our Cost Structure
in a challenging industry. In addition, we continued
to refine our centralized marketing, merchandising
and procurement organizations, allowing us to go to
market more efficiently. We also continued to improve
our capital structure, by using cash flow from the
business to reduce debt and thereby increase our
financial flexibility.
To rein in sharply rising energy costs, we have
secured long-term, fixed-rate contracts and tolling
agreements that are yielding significant annual savings.
Thanks to these and other innovative steps, we believe
our energy costs are lower on average than those of
our competitors.