Pleasanton, Calif. – Safeway Inc. is exploring a sale of the company as it reports substantial increases in net income due to its exit from the Canadian market, and smaller increases in net sales for the fourth quarter and fiscal year 2014. Although the discussions for a sale are ongoing, the company said it has not reached an agreement on a transaction, and there can be no assurance that these discussions will lead to an agreement or a completed transaction.
However, media reports indicate that Cerberus Capital Management, CVC Capital Partners Ltd. and Leonard Green & Partners LP are among suitors involved in talks with Safeway. Leonard Green and CVC jointly own BJ’s Wholesale Club. Safeway is owned by KKR & Co. and in the past year has sold 72 Chicago-area locations of its Dominick’s Store brand and also divested its Canadian operations and launched an IPO of its Blackhawk Network Holdings gift card unit. Goldman Sachs is reportedly advising Safeway in its discussions.
In terms of fiscal performance, during the fourth quarter of fiscal 2014 Safe way reported net income of $3.31 billion, compared to only $244 million in the same quarter the prior year. Most of this increase came from a $3.2 billion gain on the disposal of its Canadian operations during the quarter. Net sales were $11.3 billion, up slightly from $11.2 billion. Same-store sales grew 1.6%.
During the full fiscal year, net income skyrocketed to $3.5 billion from $596 million and net sales increased slightly to $36.1 billion from $36 billion. Same-store sales grew 1.7%.
"We are pleased with the progress we made in 2013," said Robert Edwards, Safeway's president and CEO. "Strategies to grow sales and improve operating profit dollars have begun to produce results. In 2013, we generated our best volume growth since 2006, and we had our best identical-store sales growth in the last five years. At the same time, we continue to pursue strategies to enhance momentum and increase shareholder value. We look forward to continuing progress in 2014."