Albertsons 2005 Annual Report Download - page 4

and enabled many merchandising programs both banner-specific and broad-based across
corporate retail. We completed approximately 30 remodels during fiscal 2005 and, as of the
end of fiscal 2005, approximately 85 percent of our corporate retail stores are either new or
newly remodeled. Our remodeling activity, combined with our excellent local merchandising
programs, positions us to better serve our customers and meet competitive challenges.
At Save-A-Lot, our fastest-growing retail format, we moved ahead with 62 net new store
openings and our store conversion program that blends general merchandise with our full
grocery offering. We completed the year with 466 combination stores—including licensees—
within our 1,287 Save-A-Lot store network, more than doubling fiscal 2004’s number. This
combination format now represents approximately 36 percent of all stores.
SUPERVALU’s supply chain business also made meaningful progress in fiscal 2005,
leveraging concentrated volumes, driving further labor and cost efficiencies, and managing
inventory levels. Despite overall revenue decline in distribution, primarily from previously
announced customer attrition, we achieved new business growth of five percent in fiscal 2005.
And, our comprehensive range of services for the independent grocery retailer—from category
management, center-store strategy, and private-label product programs to our industry-leading
SVHarbor business-to-business tool—continues to differentiate our offerings and underscore
our value as a supplier.
During fiscal 2005, we made a high-profile step to extend our position in the non-asset
based supply chain services industry known as third-party logistics (3PL)—a move that’s
integral to the future of our supply chain business. SUPERVALU’s acquisition of Total
Logistics gives us critical mass in the fast-growing 3PL arena. 3PL services allow companies
to focus on their core competencies—in manufacturing, marketing or retailing—yet realize
best-in-class supply chain efficiencies. 3PL clients typically own their distribution assets, such
as warehouses, trucks and other equipment, while Total Logistics supplies the know-how,
people and technology. We’re optimistic about the long-term potential for our 3PL efforts and
its ability to enrich and broaden our overall distribution services business.
We also launched a new produce business, aptly named W. Newell & Co. after our
founders. A new, 155,000 square-foot facility in Illinois, scheduled to open in August, will
support a dedicated specialized sales and service organization. Speed-to-shelf is the most
critical aspect when it comes to highly perishable produce. We intend to leverage our
expertise in produce to perfect the produce supply chain, significantly reducing the amount of
time it takes for produce to reach the case and, thereby, increasing the freshness and variety of
our produce offerings. Today, there is no national produce provider. Our vision is that W.
Newell & Co. can be that provider.
All of our business strategies across SUPERVALU are part of an integrated effort to
drive toward our financial goals. In fiscal 2005, we continued to strengthen our financial
condition. We maintained our prudence in capital spending, with fiscal 2005 spending at
$325.7 million. As in previous years, our capital spending primarily supports retail store
2