Tesco.com moves into US

Tesco PLC
25 June 2001



GROCERYWORKS TO IMPLEMENT TESCO.COM'S STORE BASED GROCERY HOME SHOPPING
SERVICE IN THE US THROUGH SAFEWAY INC'S STORES

LONDON, ENGLAND, DALLAS, TX and PLEASANTON, CA - June 25, 2001 -

Tesco PLC, the number 1 food retailer in the UK and the largest e-grocer in
the world, announced today that they will be working with Safeway Inc., a
leading US supermarket retailer through GroceryWorks (Safeway Inc.'s exclusive
on-line grocery channel) to bring Tesco's home shopping model to the United
States.

In addition, GroceryWorks has completed a round of financing led by Tesco,
which includes $35m cash (£24.9m) and other assets. Tesco.com (Tesco PLC's
on-line grocery channel) is contributing $22 million (£15.7m) in cash, as well
as intellectual property and technical resources, for 35% of the GroceryWorks
voting equity. Safeway Inc. holds approximately 50% of the voting equity and
the remainder of the voting equity is held by other current preferred
shareholders.

Tesco PLC's Chief Executive Terry Leahy said, 'Retailing services are a key
part of the Tesco strategy for growth. We have developed the best on-line
grocery home shopping system in the world which we know can be of use to other
retailers. Last year we outlined our desire to take Tesco.com into different
markets including the US. We admire Safeway Inc. greatly - they represent the
best of US retail. With Tesco's know-how and the Safeway Inc. brand we have
the perfect combination to bring grocery home shopping to the world's largest
market.'

The deal combines Tesco's experience in developing internet sites and the
system to run a store-based grocery home shopping service with Safeway Inc.'s
quality operations, procurement strength, its well-recognised brand, 1500
stores in the US and knowledge of the US market.

Tesco.com is the largest and most successful Internet-based grocery home
shopping service in the world. In the UK this service is profitable, has
almost 1 million registered customers, 70,000 orders per week and annualised
sales running at a rate of £300m ($420m).

Vasant Prabhu, Executive Vice President, Chief Financial Officer and President
of e-Commerce Businesses, Safeway Inc. said, 'We believe that on-line grocery
is a service that meets the needs of busy consumers. We have great respect for
what Tesco.com has achieved in the United Kingdom. Through our mutual
relationship with GroceryWorks, our goal is to create the biggest and best
on-line grocer in the United States.'

Gary Fernandes, Chairman of GroceryWorks said, 'I am extremely gratified that
GroceryWorks is now part of a strategic relationship with two of the world's
leading retailers. These relationships, along with the new capital, will
enable GroceryWorks to achieve its objective of becoming the leading grocery
e-tailer in the United States.'

GroceryWorks will suspend operations on Tuesday, June 26th. When resumed, the
on-line grocery business will operate under the local Safeway Inc. banner,
with a new website and deliveries coming from stores not from warehouses.



About Tesco PLC

Tesco has four parts to its strategy: to maintain a strong core UK business,
to be as strong in non-food as food, to grow internationally and to move into
retailing services such as on-line shopping. This strategy is delivering the
fastest organic growth of any major retailer in the world, with group sales of
£22.8bn ($32 billion) and group profit before tax of £1.07bn ($1.5 billion).
The company operates over 900 stores in the United Kingdom, Republic of
Ireland, Hungary, Poland, Czech Republic, Slovakia, Thailand, South Korea and
Taiwan. It has 240,000 staff worldwide and 25million sq. ft. of sales space,
of which nearly 40% is outside of the UK.

About Safeway Inc.

Safeway Inc. is a Fortune 50 company and one of the largest food and drug
retailers in North America based on sales. The company operates 1,747 stores
in the Western, Southwestern, Rocky Mountain, Midwestern and Mid-Atlantic
regions of the United States and in Western Canada, and employs almost 200,000
people. The company had sales of £22.8bn ($32 billion) in the year 2000. The
company's common stock is traded on the New York Stock Exchange under the
symbol SWY.

About GroceryWorks

GroceryWorks is an internet-based grocery home shopping service that has been
operating in Texas since January of 2000. It is the exclusive on-line grocery
channel for Safeway Inc. and is the vehicle by which Tesco and Safeway Inc.
will be developing grocery home shopping in the United States.

About the US Internet market

The US internet market offers huge opportunities. It is the largest market for
e.commerce in the world, with 60% of households having Internet access
compared to 30% in the UK. However, the market for grocery home shopping is
currently smaller than in the U.K.



Exchange rate      £1=$1.40

                   $1=£0.71


Contacts: GroceryWorks:      Gary Fernandes: 972-813-4065
          Tesco:             Lucy Neville-Rolfe: 01992-646-654
                             Steve Butler: 01992-644-800
          Safeway:           Julie Hong: 925-467-3832 (analysts)
                             Debra Lambert: 925-467-3267 (media)







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