Analyst: Gina Tedesco & Morgan Phillips October 29, 2009

 One of largest food and drug retailers  Extensive network of distribution, manufacturing, and food facilities.  Provides value to customers by maintaining high in-store standard and wide selection of high quality produce and meat at competitive prices  Has 1,739 stores (West coast and Canada)  Sales of $44.1 Billion in 2008  Fortune 50 company  Map Map

 Key ingredient of success is introduction of most extensive private label programs in North America.  3,000 products including Safeway, Lucerne and Mrs. Writes.  Additional 1,250 premium products (SELECT Label)  Safeway also holds a 49% interest in Casa Ley, S.A. de C.V., which as of June 18, 2009, operated 149 food and general merchandise stores in Western Mexico.

 Current Price  52 week range  Beta: 0.72  Market Cap 9.19B  P/E  PEG 1.42 ( SWY) Summary

Headlines 5 Stocks With Big Insider Buying Posted: Oct 27, :44 PM by Aryeh KatzAryeh Katz -October 20,2009, director Michael Shannon bought 6200 shares of the company for roughly $143,000. Safeway Inc. Announces Third Quarter 2009 Earning - iframetop Safeway Launches Annual Company wide Breast Cancer Fundraising Campaign Safeway Inc. Names Joseph Ennen Senior Vice President, Consumer Brands

EPS Growth Estimates Finance.yahoo.com

TTM (169.8) 2002-(828.1)

 Current Price: $22.32  Fair Value Estimate: $30.00  Consider Buying: $21.00  Consider Selling: $42.00  Morningstar: 4 Star Rating  Insider Ownership is increasing

Strengths 3 rd largest supermarket chain Offers an upscale range of products including their own Brand repositioned in 2005 to differentiate itself from competitors and increase brand involvement Addition to product line: Fuel Trading lower than intrinsic value Created brand loyal and brand value customer base Stable management “Lifestyles” stores generate higher sales Weaknesses Higher prices High debt from the “lifestyles” project Renovated stores are expensive to maintain Food retailing sectors are extremely price competitive

Opportunities Product line expansion Enter new regions of the country Threats Competitors- Tesco, Wal- mart, Krogers, SuperValue, Whole Foods, Costco Invested too much into creating a welcoming atmosphere 80% employees are in the union (Fear of Strike)

Recommendation “In this difficult economy, we are working diligently to lower costs and meet the needs of our customers with high quality products, lower everyday prices and attractive club card specials,” Steve Burd (Chairman, President, CEO)  Present Proctor & Gamble  Purchase half of what we need to meet our criteria