Safeway to Be Modernized, Expanded / to Tune of about $12 Million a Year

By Marsh, Kimberly | THE JOURNAL RECORD, December 10, 1987 | Go to article overview

Safeway to Be Modernized, Expanded / to Tune of about $12 Million a Year


Marsh, Kimberly, THE JOURNAL RECORD


$12 million a year will be spent over at least five years to modernize and expand the 106-store former Oklahoma Division of Safeway Stores Inc., an executive of the new owner, SWO Acquisition Corp., said Wednesday.

Projecting "healthy sales" for the future, Max Raydon, executive vice president and chief operating officer of SWO Acquisition Corp., also said the advertising budget for the chain has been doubled, and employment is expected to increase naturally with expansion planned by the investors.

SWO Acquisition Corp. closed the $165 million acquisition of the Oklahoma Division of Safeway Stores Inc. on Nov. 25. The New York investment firm of Clayton & Dubilier is the primary organizer and key investor in SWO, which was formed for the purpose of buying the Oklahoma division.

Rayden appeared in Oklahoma City Wednesday with Martin Dubilier, chairman of Clayton & Dubilier, and Don Phillips, president and chief executive officer of SWO. They will tour 65 of the stores this week.

The acquisition included 25 supermarkets and three supply plants located in the Oklahoma City metropolitan area, in addition to stores located throughout Oklahoma, in the Texas panhandle and southern Kansas.

"All the capital is here, and the bank commitments are in place," said Dubilier.

Aside from Clayton & Dubilier, investors in SWO Acquisition include employees of Safeway's Oklahoma division and outside investors. Management employees own 20 percent of the new company.

In confirming SWO's commitment to the Oklahoma market, Dubilier said the company is willing to supply additional capital to modernize existing stores and expand the supermarket chain.

"We plan to modernize and upgrade many of our stores and add new services, such as deli counters and bakeries, to many stores," Dubilier said.

Expansion ultimately will require future addition of employees for the chain, which currently employs approximately 5,500 hourly and salaried people, Dubilier said. There are no immediate plans to close the less profitable stores or lay off employees, he said.

"We never thought we would have to close stores," Dubilier said.

Only one or two stores in the chain are unprofitable, he said, but he would not disclose their location. SWO will study each store to see how it fits in its local market environment.

The division has annual sales of about $700 million, SWO reported, and has the highest market share of any chain in the market area.

"As we continue to improve operations," said Phillips, naturally we will be looking at opening new stores, upgrading old ones and perhaps closing some stores. …

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