Safeway (NYSE:SWY) is about to release earnings. Ponder this Bear Case Scenario:
Return on investment is in decline. The life style remodel gambit is a failure and Safeway has lost focus.
Wal-Mart small store expansion is encroaching into many traditional neighbourhood grocery store markets.
Pricing strategy is confused. Low end has moved away to discounters leaving shoppers confused about why they are in the store.
As Safeway entertains more private label they become more exposed to commodity risks which have skewered other operators.
George Gutowski writes from a caveat emptor perspective.