SUPERMARKET giant to close 165 stores, eliminate jobs
Wednesday, July 18th 2001, 12:00 am
By: News On 6
BOISE, Idaho (AP) _ Supermarket giant Albertson's Inc. announced plans on Wednesday to close about 165 stores in 25 states and eliminate 15 to 20 percent of its managerial and administrative jobs above the store level.
The nation's second-largest food and drug retailer continues to struggle to digest its 1999 acquisition of American Stores, and its new chairman and chief executive said the cuts were aimed at reducing operating costs and reallocating capital.
``We are continuing our in-depth operations review,'' Larry Johnston said in a statement. ``The major actions announced today are just the first in a series of long-overdue steps that are necessary to begin unleashing the vast potential of this company.''
The American Stores acquisition more than doubled the number of Albertson's-owned outlets to more than 2,500 in 36 states, including Oklahoma. It was not immediately clear whether the closures will affect any stores in Oklahoma.
Difficulty integrating the American Stores operations led to the April hiring of Johnston, a former General Electric Co. senior executive with a reputation for ironing out acquisition problems and consolidating businesses.
Albertson's reported a 4 percent increase in first-quarter profits last month, meeting Wall Street expectations. It posted net income of $186 million or 46 cents per share on $9.3 billion in sales for the 13 weeks through May 3, and Johnston announced that the ``major roadblocks in the 1999 American Stores Company merger are behind us.''
But on Wednesday, he said the company needed to cut administrative overhead through ``a significant number of permanent layoffs of corporate, division and certain distribution center office associates.''
Albertson's said it would offer a voluntary separation program to administrative and managerial personnel with 20 or more years of continuous service. Laid-off employees would be offered a severance package, including job placement services, the company said.
It was not immediately clear how many jobs would be eliminated, or what stores are being closed.
The company said it expects to record nonrecurring charges of about $585 million before taxes to cover the cost of the restructuring plan, including $550 million in the second quarter. But the personnel cuts alone are expected to reduce costs by $100 million a year.
``Because these actions impact our associates, the decisions announced today are not easy; however, in this increasingly competitive industry, reducing our operating costs is a necessary step in ensuring our company's long-term success,'' said Peter Lynch, the former American Stores executive who became president and chief operating officer of Albertson's after the merger.
In addition to the personnel cuts and closure of stores identified as underperforming, Lynch said division offices would be consolidated and Albertson's would dispose of some surplus property.
However, Johnston said Albertson's ``growth momentum'' should continue despite the store closures, through improved sales in existing stores, new store openings and ``strategic `fill-in' acquisitions.'' He said the company expects to reach $38 billion in annual revenues this fiscal year.
``Further, we are becoming increasingly confident that over the next year we will achieve our expense reduction goal of $250 million,'' he said