In 2006, competition in the $540 billion US supermarket industry was fierce. Food retailers fought for market share not only against each other, but against increasingly popular supercenters, convenience stores, and restaurants. In response, Safeway began to diversify its business, launching new Lifestyles stores and investing in a major rebranding campaign. In 2004, it returned to the black after two years of losses. In this case, students use a variety of financial data to compute Safeway's weighted average cost of capital (WACC), based on the company's existing capital structure.

Case id: 080309