Safeway 1997 Annual Report Download - page 8

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5
Internal
Growth
Capital
Spending
New Distribution Center (top) Construction began in 1997 on a new 815,000 square
foot distribution center in Maryland. This state-of-the-art facility will replace an
existing center and, when completed, will enable our 127-store Eastern Division
to operate more efficiently. We expect the new center to employ more than
600 people.
Store Modernization (middle) This new 55,000 square-foot store in Troutdale, Oregon
is one of 37 opened during 1997. By concentrating the majority of our capital
spending in existing areas, where we already command strong market positions,
we believe we can enhance prospects for long-term sales growth and operating
margin improvement. Approximately 54% of all our stores have been built or
remodeled in the last five years, leaving us significant opportunities to continue
improving our store base.
Disciplined Spending (bottom) Before a major capital spending project is approved,
it is reviewed by our Real Estate Committee, whose seven members include the
chief executive officer and the chief financial officer. At Safeway, capital spending is
a carefully planned, highly disciplined process. We require a 22.5% pretax return
on investment for all new store and remodel projects. Projects are tracked over an
extended period to measure actual results against targeted rates of return.