All this is not to criticise the logic of Safeway's plan to buy back pounds 280m of its equity. With the shares down to a near five year low and yielding 5 per cent, the company may as well take advantage of low interest rates and swap some debt for equity. Unfortunately for Mr Smith, financial engineering does nothing to solve the group's underlying weaknesses as a business. It has the weakest brand of the big four, too many small, poorly sited stores, and a reputation for uncompetitive prices.
Two years ago, Safeway effectively admitted the game was up by holding merger talks with Asda. Asda is now merging with Kingfisher instead. As the food retailing landscape changes around it, Safeway looks more isolated and friendless than ever. A deal with Royal Ahold or Carrefour would give it genuine scale but neither have come knocking. A no-premium merger with Somerfield might produce some cost saving benefits, but that really would be the last resort for the deperate.
In these circumstances, all Safeway can do is keep on at the nuts and bolts of food retailing; improving product availability, working to improve sales with newfangled "category management systems" and throwing in the occasional party piece, such as a triple points on its loyalty scheme. With pounds 8bn of sales and pounds 350m of profits, Safeway is hardly a basket case. But profits are the same now as they were five years ago and the competition is getting tougher all the time. As one analyst puts it: "Safeway can survive, but can it thrive?" Not without a partner it can't.