Safeway reduces spending, plans to cut costs in 2009

PLEASANTON Safeway Inc. announced Thursday that it plans to drastically eliminate excess spending in 2009 and has set a goal of lowering its debt from $5.4 billion at the end of 2008 to $4.5 to $4.7 billion by the end of next year.

“These results will be supported by an aggressive cost reduction effort, coupled with price reductions, to further the company's effort to lower everyday pricing,” said Safeway in a statement.

The company plans include focusing on its brands and promotions, reducing capital investments and eventually reducing its energy spending as well. Cash expenditures will drop to $1.2 billion, $400 million less than in 2008, a move that should just about double its free cash flow.

Analysts polled by Thomson Reuters expect Safeway to earn $2.39 per share next year, and the company predicts between $2.34 and $2.44.