Safeway Inc is about to report earnings and let us know how the grocery business is doing. everyone has to eat right? So it’s should be OK right? Well read on and see if you can still afford some of the better stuff:
Wal-Mart is trying to kick their ass big time. And in certain cases they are beatin the crap out of Safeway. Wal-mart is large and mean. Very mean.
Returns on capital have been in an uncomfortable decline and will continue to be since the Lifestyle remodel investment failed to provide enough of a sustained revenue lift to generate the anticipated rate of return. Translation. Management got it wrong and there is no clear Plan B.
High end consumers are happy with Whole Foods and others and are not coming back.
Low end consumers are sticking with discounters and are not coming back.
Safeway is like the middle class. Shrunk and hollowed out.
George Gutowski writes from a caveat emptor perspective.