William Mitchell, chairman of Safeway Stores Inc., predicted yesterday that inflation would raise the price of food on supermarket shelves by 9 to 10 percent during 1978, or 2 percent more than the U.S. Department of Agriculture forecast earlier this year.
Despite the foll of rising inflation, Mitchell told stockholders here that Safeway's sales rose to a record high of $11.25 billion in 1977, a 7.7 percent gain over 1976.
Profits of $102.305 million ($3.93 a share) represented the chain's second best showing, but were disappointing," Mitchell said, since they barely topped last year's per share profits of $3.89. In 1975, profits roared to a record $146.254 million.
The record sales for 1977 have continued this year, he said. Figures for the first quarter, ended April 22, showed a 13 percent climb in sales over the same period a year ago. Since the end of last quarter, sales have continued to rise at a 15 percent rate.
"Inflation hurts everyone," Mitchell told a group of about 100 stockholders at the company's annual meeting at the downtown Hilton here.
"Living costs are higher and family earnings don't go as far," he added. "Our operating costs are up and the money in the cash register doesn't buy as much when we've replaced the stock on the shelves."
Safeway increased its dividend payment for the eighth year in a row, paying $2.20 a share in 1977 or 7 percent more than a 1976.
"Not to be making excuses, but we did have somewhat the same problems last year as we had in 1976 - severe competition conditions, increasing operating costs and a rash of work stoppages," Mitchell said.
Mitchell also told the stockholders that the government received "a pretty good return" from Safeway, since its 1977 tax bill amounted to $255 million or four-and-a-half times what the company paid out in dividends.
"These dividends were lower than they might otherwise be because of the fact that an expenditure equivalent to about one-third of total net profit is incurred in filling out forms and otherwise complying with the multitudinous government regulations," Mitchell said.
He further criticized the government's tax bite by adding, "Of course we have to pay taxes or who else would support such projects as $375,000 for a Pentagon study of the frisbee, or $159,000 to teach mothers how to play with their babies, or even $29,324 for a study of the mating calls of the Central American toad."
Safeway has launched several programs in an attempt to help consumers fight inflation and cut the company's own inflationary costs while maintaining its status as the leading U.S. supermarket operation.
Last year Safeway started experimenting with the concept of "Super Stores" with larger floor space in which customers can conveniently "one-stop shop" for grocieries, some clothing and appliances such as televisions and microwave ovens. There are now nearly 270 such stores, mostly in the Western states.
Dale Lynch, who took over as Safeway's president last October, said the company plans to build more Super Stores in 1978. A company spokesman said a new Safeway is planned for the Georgetown area of the District, but the company has not decided yet if it will be one of the "Super Stores."
Lynch also said that Safeway has plans to compete in the growing market for generic drugs. He refused to state what those plans are until the concept is presented to regional managers early next month.