Safeway (SWY)

Safeway Inc. Announces Non-Cash Expense Adjustment Related to Accounting for Leases

Contacts: Melissa Plaisance (925) 467-3136

Julie Hong (925) 467-3832

Pleasanton, CA – February 23, 2005 — Safeway Inc. announced today that it will incur a non-cash lease expense adjustment of $6.5 million, after tax ($0.014 per diluted share) in its fourth quarter of 2004. This adjustment will conform the Company’s lease accounting policies to views expressed by the Office of the Chief Accountant of the Securities and Exchange Commission on February 7, 2005. The Company has decided not to restate prior financial statements because the impact on prior periods is immaterial.

The Company reviewed its lease accounting practices related to rent holidays, depreciable lives of leasehold improvements, and tenant improvement allowances.

Upon completion of this review, Safeway recorded the $6.5 million adjustment mentioned above related to rent holidays. Historically, the Company recorded lease expense when the store opened and the Company began making lease payments. However, the Company frequently takes possession of leased properties prior to opening for construction purposes. The adjustment reflects commencement of lease expense at the earlier of the first rent payment or the date of possession of the leased property. This change in accounting does not affect the timing of lease payments or cash flow, and is not expected to have a material effect on future results of operations.

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