At investor conference, Safeway outlines dividend plan

Canada dividend to be used to pay off U.S. debt

PLEASANTON, Calif. — Safeway on Tuesday said that it expects to earn $1.60 to $1.80 per diluted share during the quarter, after the company's board approved a $1.1 billion dividend from Canada to the United States.

The dividend, Safeway said during its 2011 investor conference, will be used to pay off $600 million of U.S. debt, and the company will use the remainder of the dividend for share repurchases.

The company also noted that the dividend is expected to reduce 2011 earnings per diluted share by 15 cents due to tax expense (22 cents per diluted share) and will be partially offset by share repurchases (6 cents per diluted share) and lower interest expense (1 cent per diluted share). The combined impact of the dividend and related share repurchases is expected to be accretive to earnings per diluted share in 2012 and beyond.

"We made tremendous progress in 2010. We achieved price parity in both the United States and Canada, continued to achieve significant cost reductions, launched new digital marketing initiatives and continued innovation in corporate brands," said Steve Burd, Safeway chairman, president and CEO. "With 85% of our store base remodeled into Lifestyle stores, we believe we have the freshest asset base in the supermarket industry. When you combine all this with our differentiated offering, we believe we are very well-positioned for future growth."

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