Exhibit 99.1

FOR IMMEDIATE RELEASE

SAFEWAY INC. ANNOUNCES

SECOND-QUARTER 2007 EARNINGS

Lifestyle Stores Continue to Drive Growth

Contacts: Melissa Plaisance (925) 467-3136

Julie Hong (925) 467-3832

Pleasanton, CA – July 19, 2007

Results From Operations

Safeway Inc. today reported net income of $218.2 million ($0.49 per diluted share) for the second quarter ended June 16, 2007.

Net income in the second quarter of 2006 was $246.2 million ($0.55 per diluted share), which benefited from a $58.5 million ($0.13 per diluted share) reduction in income tax expense related to an income tax refund.

Sales and Other Revenue

Total sales and other revenue increased 4.9% to $9.8 billion in the second quarter of 2007 compared to $9.4 billion in the second quarter of 2006. Identical-store sales increased 4.5% for the second quarter of 2007. Excluding the effect of fuel sales, identical-store sales increased 3.7%. Contributions from Lifestyle stores as well as strong perishable and non-perishable performance drove this increase.

“Our positive sales and income trends continued in the second quarter, bolstered by strong performance from both new and seasoned Lifestyle stores,” said Steve Burd, Chairman, President, and CEO. “We are on track to deliver earnings toward the top end of the range we previously provided for the year.”

Gross Profit

Gross profit margin decreased 15 basis points to 28.51% of sales in the second quarter of 2007 compared to 28.66% in the second quarter of 2006. Higher fuel sales (which have a lower gross profit margin) accounted for 14 basis points of the gross profit margin decline.

Operating and Administrative Expense

Operating and administrative expense improved 37 basis points to 24.21% of sales in the second quarter of 2007 from 24.58% in the second quarter of 2006. This improvement is

primarily due to increased sales, lower workers’ compensation expense, net property gains and lower store labor as a percentage of sales, partly offset by higher occupancy costs.

Interest Expense

Interest expense declined to $89.7 million in the second quarter of 2007 compared to $91.6 million in the second quarter of 2006 due to lower indebtedness, partly offset by higher average interest rates.

Income Tax Expense

Income tax expense was $119.9 million, or 35.5% of pretax income, in the second quarter of 2007.

Income tax expense was $50.9 million, or 17.1% of pretax income, in the second quarter of 2006. Income tax expense in that quarter was reduced by a $58.5 million ($0.13 per diluted share) benefit related to an income tax refund.

24-Week Results

Net income for the first 24 weeks of 2007 was $392.6 million ($0.88 per diluted share) compared to $389.1 million ($0.86 per diluted share) in the first 24 weeks of 2006. Net income in the first 24 weeks of 2006 benefited from a $58.5 million ($0.13 per diluted share) reduction in income tax expense related to an income tax refund.

The gross profit margin was 28.89% in the first 24 weeks of 2007 compared to 28.87% in 2006. Operating and administrative expense was 24.80% in 2007 compared to 25.04% in 2006.

Stock Repurchases

During the second quarter of 2007, Safeway purchased 3.4 million shares of its common stock at an average price of $35.52 per share and a total cost of $120.0 million, including commissions. The remaining board authorization for stock repurchases is $627 million.

Capital Expenditures

Safeway invested $753.1 million in capital expenditures in the first 24 weeks of 2007. The company opened five new Lifestyle stores, completed 82 Lifestyle remodels and closed 26 stores. For the year, the company expects to spend approximately $1.7 billion in capital expenditures, open approximately 20 new Lifestyle stores and complete approximately 260 Lifestyle remodels.

Cash Flow

Net cash flow from operating activities was $652.1 million in the first 24 weeks of 2007 compared to $742.5 million in the first 24 weeks of 2006. Cash flow in 2006 benefited from a $173 million decline in inventory. Inventory declined in 2007 as well, but only by $66 million.

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Net cash flow used by investing activities, which consists principally of cash paid for property additions, was $692.8 million for the first 24 weeks of 2007 compared to $725.8 million in 2006.

Financing activities provided net cash flow of $23.4 million in the first 24 weeks of 2007. Financing activities used cash of $274.6 million in 2006 primarily due to the higher pay down of maturing long-term debt.

Guidance

Safeway narrowed the earnings guidance range for 2007 to $1.95 to $2.00 per diluted share from the previously provided range of $1.90 to $2.00. Safeway confirmed 2007 annual guidance for both non-fuel, identical-store sales growth of 3.6% to 3.8% and free cash flow of $400 million to $600 million.

About Safeway

Safeway Inc. is a Fortune 100 company and one of the largest food and drug retailers in North America based on sales. The company operates 1,740 stores in the United States and Canada and had annual sales of $40.2 billion in 2006. The company’s common stock is traded on the New York Stock Exchange under the symbol SWY.

Safeway Conference Call

Safeway’s investor conference call discussing second-quarter results will be broadcast live over the Internet at www.safeway.com/investor_relations at 8:00 AM PDT July 19, 2007. Click on Webcast Events to access the live call. An on-demand webcast of the conference call will also be available for approximately one week following the live call.

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This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements relate to, among other things, estimates of diluted earnings per share, identical-store sales, capital expenditures, free cash flow, financial and operating results, and Lifestyle stores. Forward-looking statements are indicated by words or phrases such as “guidance,” “believes,” “expects,” “anticipates,” “estimates,” “plans,” “continuing,” “ongoing,” and similar words or phrases and the negative of such words and phrases. Forward-looking statements are based on our current plans and expectations and involve risks and uncertainties which are, in many instances, beyond our control, and which could cause actual results to differ materially from those included in or contemplated or implied by the forward-looking statements. Such risks and uncertainties include the following: general business and economic conditions in our operating regions, including consumer spending levels; currency valuations, population, employment and job growth in our markets; pricing pressures and competitive factors, which could include pricing strategies, store openings, remodels or acquisitions by our competitors; results of our programs to control or reduce costs, improve buying practices and control shrink; results of our programs to increase sales;

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results of our efforts to revitalize corporate brands; results of our programs to improve our perishables departments; results of our promotional programs; results of our programs to improve capital management; results of our efforts to improve working capital; results of any on-going litigation in which we are involved or any litigation in which we may become involved; the resolution of uncertain tax positions; the ability to achieve satisfactory operating results in all geographic areas where we operate; changes in the financial performance of our equity investments; labor costs, including benefit plan costs and severance payments, or labor disputes that may arise from time to time and work stoppages that could occur in areas where certain collective bargaining agreements have expired or are on indefinite extensions or are scheduled to expire in the near future; failure to fully realize or delay in realizing growth prospects for new business ventures including Blackhawk Network Holdings, Inc. (“Blackhawk”); legislative, regulatory, tax or judicial developments, including with respect to Blackhawk; the cost and stability of fuel, energy and other power sources; unanticipated events or changes in real estate matters, including acquisitions, dispositions and impairments; adverse weather conditions; performance in new business ventures or other opportunities that we pursue, including Blackhawk; the capital investment in and financial results from our Lifestyle stores; the rate of return on our pension assets; and the availability and terms of financing. We undertake no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof and disclaim any obligation to do so. Please refer to our reports and filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and subsequent Current Reports on Form 8-K, for a further discussion of these risks and uncertainties.

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SAFEWAY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per-share amounts)

(Unaudited)

	12 Weeks Ended						24 Weeks Ended
	June 16, 2007			June 17, 2006			June 16, 2007			June 17, 2006
Sales and other revenue	$	9,823.3		$	9,367.1		$	19,145.1		$	18,261.7
Cost of goods sold		(7,022.2	)		(6,682.5	)		(13,613.4	)		(12,988.9	)
Gross profit		2,801.1			2,684.6			5,531.7			5,272.8
Operating and administrative expense		(2,378.7	)		(2,302.4	)		(4,748.3	)		(4,572.9	)
Operating profit		422.4			382.2			783.4			699.9
Interest expense		(89.7	)		(91.6	)		(179.3	)		(184.6	)
Other income, net		5.4			6.5			12.2			14.2
Income before income taxes		338.1			297.1			616.3			529.5
Income tax expense		(119.9	)		(50.9	)		(223.7	)		(140.4	)
Net income	$	218.2		$	246.2		$	392.6		$	389.1
Basic earnings per share	$	0.50		$	0.55		$	0.89		$	0.87
Diluted earnings per share	$	0.49		$	0.55		$	0.88		$	0.86
Weighted average shares outstanding:
Basic		440.0			447.5			440.1			448.3
Diluted		446.2			449.4			446.3			450.2

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SAFEWAY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per-share amounts)

(Unaudited)

	June 16, 2007			Year-end 2006
ASSETS
Current assets:
Cash and equivalents	$	202.9		$	216.6
Receivables		458.8			461.2
Merchandise inventories		2,603.9			2,642.5
Prepaid expenses and other current assets		365.7			245.4
Total current assets		3,631.3			3,565.7
Total property, net		10,071.2			9,773.3
Goodwill		2,399.4			2,393.5
Prepaid pension costs		127.9			137.3
Investment in unconsolidated affiliate		227.3			219.6
Other assets		279.5			184.4
Total assets	$	16,736.6		$	16,273.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of notes and debentures	$	742.3		$	790.7
Current obligations under capital leases		41.0			40.8
Accounts payable		2,230.7			2,464.4
Accrued salaries and wages		433.9			485.8
Income taxes		12.0			100.6
Other accrued liabilities		692.2			719.1
Total current liabilities		4,152.1			4,601.4
Long-term debt:
Notes and debentures		4,648.4			4,428.7
Obligations under capital leases		584.9			607.9
Total long-term debt		5,233.3			5,036.6
Deferred income taxes		218.5			117.4
Pension and postretirement benefit obligations		203.5			204.0
Accrued claims and other liabilities		711.5			647.5
Total liabilities		10,518.9			10,606.9
Stockholders' equity:
Common stock: par value $0.01 per share; 1,500 shares authorized; 584.9 and 582.5 shares issued		5.8			5.8
Additional paid-in capital		3,929.7			3,811.5
Treasury stock at cost; 145.8 and 142.4 shares		(4,309.9	)		(4,188.7	)
Accumulated other comprehensive income		197.4			94.8
Retained earnings		6,394.7			5,943.5
Total stockholders' equity		6,217.7			5,666.9
Total liabilities and stockholders' equity	$	16,736.6		$	16,273.8

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SAFEWAY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	24 Weeks Ended
	June 16, 2007			June 17, 2006
OPERATING ACTIVITIES
Net income	$	392.6		$	389.1
Reconciliation to net cash flow from operating activities:
Property impairment charges		18.7			25.3
Depreciation expense		478.9			444.7
LIFO expense		4.6			4.6
Equity in earnings of unconsolidated affiliate		(7.7	)		(6.9	)
Net pension expense		33.1			35.9
Contributions to pension plans		(18.2	)		(15.0	)
Gain on property retirements and lease exit costs, net		(14.6	)		(5.6	)
Increase in accrued claims and other liabilities		14.4			40.4
Stock option expense		22.9			23.8
Other		6.6			5.8
Changes in working capital items:
Receivables		(31.0	)		(3.6	)
Inventories at FIFO cost		66.3			172.6
Prepaid expenses and other current assets		(54.7	)		(56.8	)
Income taxes		2.9			(67.7	)
Payables and accruals		(155.2	)		(128.8	)
Payables related to third-party gift cards, net of receivables		(107.5	)		(115.3	)
Net cash flow from operating activities		652.1			742.5
INVESTING ACTIVITIES
Cash paid for property additions		(753.1	)		(741.3	)
Proceeds from sale of property		87.9			45.2
Other		(27.6	)		(29.7	)
Net cash flow used by investing activities		(692.8	)		(725.8	)
FINANCING ACTIVITIES
Additions to long-term borrowings		433.4			969.3
Payments on long-term borrowings		(305.4	)		(1,072.2	)
Repurchase of common stock		(120.0	)		(139.7	)
Dividends paid on common stock		(50.7	)		(45.0	)
Net proceeds from exercise of stock options		53.9			12.3
Income tax refund related to prior years' debt financing		6.3			—
Other		5.9			0.7
Net cash flow provided (used) by financing activities		23.4			(274.6	)
Effect of changes in exchange rate on cash		3.6			0.5
Decrease in cash and equivalents		(13.7	)		(257.4	)
CASH AND EQUIVALENTS
Beginning of period		216.6			373.3
End of period	$	202.9		$	115.9

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SAFEWAY INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

(Dollars in millions)

(Unaudited)

TABLE 1: CAPITAL EXPENDITURES AND OTHER STATISTICAL DATA

	12 Weeks Ended				24 Weeks Ended
	June 16, 2007		June 17, 2006		June 16, 2007		June 17, 2006
Cash capital expenditures	$	367.2	$	327.8	$	753.1	$	741.3
Stores opened		4		4		5		5
Stores closed		19		6		26		10
Lifestyle remodels completed		59		56		82		80
Stores at end of period		1,740		1,770
Square footage (in millions)		79.8		80.8
Fuel sales	$	887.4	$	765.0	$	1,538.0	$	1,357.4
Number of fuel stations at end of period		351		322

TABLE 2: RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

	(A+B-C)			A			B			C
	Rolling Four Quarters June 16, 2007			Year Ended December 30, 2006			24 Weeks Ended June 16, 2007			24 Weeks Ended June 17, 2006
Net income	$	874.1		$	870.6		$	392.6		$	389.1
Add (subtract):
Income taxes		452.7			369.4			223.7			140.4
Interest expense		390.8			396.1			179.3			184.6
Depreciation		1,025.6			991.4			478.9			444.7
LIFO expense		1.2			1.2			4.6			4.6
Stock option expense		50.3			51.2			22.9			23.8
Property impairment charges		32.6			39.2			18.7			25.3
Equity in earnings of unconsolidated affiliate		(21.9	)		(21.1	)		(7.7	)		(6.9	)
Adjusted EBITDA	$	2,805.4		$	2,698.0		$	1,313.0		$	1,205.6
Total debt at June 16, 2007	$	6,016.6
Less cash and equivalents in excess of $75.0 at June 16, 2007		127.9
Adjusted Debt	$	5,888.7
Adjusted EBITDA as a multiple of interest expense		7.18	x
Minimum Adjusted EBITDA as a multiple of interest expense under bank credit agreement		2.00	x
Adjusted Debt to Adjusted EBITDA		2.10	x
Maximum Adjusted Debt to Adjusted EBITDA under bank credit agreement		3.50	x

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SAFEWAY INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

(Dollars in millions)

(Unaudited)

TABLE 3: RECONCILIATION OF NET CASH FLOW FROM OPERATING ACTIVITIES TO ADJUSTED EBITDA

	(A+B-C) Rolling Four Quarters June 16, 2007			A Year Ended December 30, 2006			B 24 Weeks Ended June 16, 2007			C 24 Weeks Ended June 17, 2006
Net cash flow from operating activities	$	2,084.6		$	2,175.0		$	652.1		$	742.5
Add (subtract):
Income taxes		452.7			369.4			223.7			140.4
Interest expense		390.8			396.1			179.3			184.6
Deferred income taxes		(1.1	)		(1.1	)		—			—
Net pension expense		(80.3	)		(83.1	)		(33.1	)		(35.9	)
Contributions to pension plans		32.4			29.2			18.2			15.0
Accrued claims and other liabilities		15.2			(10.8	)		(14.4	)		(40.4	)
Gain on property retirements and lease exit costs, net		26.8			17.8			14.6			5.6
Changes in working capital items		(101.8	)		(181.4	)		279.2			199.6
Other		(13.9	)		(13.1	)		(6.6	)		(5.8	)
Adjusted EBITDA	$	2,805.4		$	2,698.0		$	1,313.0		$	1,205.6

TABLE 4: RECONCILIATION OF GAAP CASH FLOW MEASURE TO FREE CASH FLOW*

	24 Weeks Ended						Forecasted Range Fiscal 2007
	June 16, 2007			June 17, 2006
Net cash flow from operating activities, as reported	$	652.1		$	742.5
Decrease in payables related to third party gift cards, net of receivables		107.5			115.3
Net cash flow from operating activities, as adjusted		759.6			857.8		$	2,100.0		$	2,200.0
Net cash flow used by investing activities		(692.8	)		(725.8	)		(1,700.0	)		(1,600.0	)
Free cash flow	$	66.8		$	132.0		$	400.0		$	600.0

* Excludes cash flow from payables related to third-party gift cards, net of receivables. Cash from the sale of third-party gift cards is held for a short period of time and then remitted, less Safeway's commission, to card partners. Because this cash flow is temporary it is not available for other uses, and is therefore excluded from the company's calculation of free cash flow.

TABLE 5: SAME-STORE SALES INCREASES

	Second Quarter 2007
	Comparable- Store Sales Increases		Identical- Store Sales Increases*
As reported	4.9	%	4.5	%
Excluding fuel sales	4.0	%	3.7	%

* Excludes replacement stores.

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