) continues to remain on headlines for the past several months.
Following a disappointing third quarter 2013 performance,
decision to sell its Dominic stores by fiscal 2014 and the
company's recent exit from the Canadian market, the company is
again on news with its decision to voluntarily recall many of its
The company has decided to voluntarily recall a number of
products supplied by (or ingredients of the products supplied by)
Reser's Fine Foods or Taylor Farms. The recall follows the
possible contamination of the food items with Listeria
monocytogenes. The items are available behind the glass at the
full-service deli counters or in self-serve coolers in the deli
department of Safeway stores.
Although no confirmed illness has been reported so far, Safeway
is taking additional precautions by recalling the products. The
company is ready to provide the customers a full refund.
Listeria is an organism that can cause serious and sometimes even
fatal infections in individuals with weak immune systems. Healthy
people may also experience short term symptoms from this
infection. Listeria infection can also increase chances of
miscarriages and stillbirths among pregnant woman.
On Sep 26, 2013, Safeway had also recalled six Angel Food Cake
products, thought to contain the undeclared allergens soy and
milk. Consumption of such products can be potentially harmful for
people who have an allergy or severe sensitivity to soy or milk.
Risk of a serious life-threatening allergic reaction cannot also
be ruled out.
Although shares were not impacted by this latest product recall
news, we feel any additional product recalls in future could have
an adverse impact on the brand image and popularity of the
grocery and pharmacy major.
This is particularly pertinent at a time when Safeway is reeling
under sluggish revenues and margin pressures. Such events can
have a ripple effect, lowering investor confidence and hampering
growth prospects for the company, going forward.
Safeway has been lately undertaking few initiatives to increase
its focus in the core grocery business and subsequently increase
profitability in it. The recent exit from the Canadian market is
considered to be beneficial as it can ease the debt pressure of
the company, along with providing attractive returns to the
shareholders. Further, the plan to exit from the Chicago market
is also a part of the company's plan to effectively allocate
resources and enhance profitability in the existing markets.
Customer loyalty programs like Just for U and Club Card have been
introduced, understanding the need of the customers in the
diverse retail U.S. market. The management disclosed of having 6
million registered users under the Just for U, digital
platform. The IPO of the Black Hawk Network Holdings is
expected to improve the highly leveraged balance sheet of
Currently Safeway carries a Zacks Rank #3 (Hold). Some
better-performing stocks that are worth a look include
Marks & Spencer Group plc
Whole Foods Market, Inc.
) each carrying a Zacks Rank #2 (Buy).
CARREFOUR SA (CRRFY): Get Free Report
SAFEWAY INC (SWY): Free Stock Analysis Report
WHOLE FOODS MKT (WFM): Free Stock Analysis
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