Albertsons to close 26 U.S. stores

By Walter Hamilton

Sept. 6, 2012 12 AM PT

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The parent company of the Albertsons supermarket chain is closing 26 stores nationwide, including 18 in Southern California, as it tries to overcome sharp operating losses and stiff price competition from big-box rivals.

Supervalu Inc. said late Wednesday that the closings are part of a decision to eliminate about 60 stores nationwide, primarily in its Albertsons and Save-A-Lot chains. Albertsons will have 228 stores in California after the closures.

Among the Albertsons locations in Southern California scheduled to be closed by December are stores in Long Beach, Glendale, Northridge and Van Nuys. A store in Culver City closed last month.

The stores being eliminated are “underperforming or non-strategic,” Supervalu said in a statement. The company did not disclose the location of the remaining eight Albertsons stores.

The closures underscore the difficulties facing Albertsons and other traditional grocery chains, which are grappling with feverish competition from dollar stores, large discounters and big-box retailers.

Wal-Mart Stores Inc. and Target Corp. have been expanding aggressively into the grocery business in recent years, compressing profit margins in an industry already beset by low margins.

“Retailers like Target don’t have to make money on the grocery part of the store -- they can use food to drive traffic to get people in to buy other things,” said Jim Hertel, a managing partner at consulting firm Willard Bishop. “So more outlets are selling food and comparable items for close to 15% less than most traditional supermarkets.”

Wal-Mart and other retailers have been successful at negotiating advantageous prices with suppliers, which have been willing to cut favorable deals because of their rising buying power.

“People want to be selling products to retailers that are growing, and a lot of food retailers are not growing,” Hertel said.

Wal-Mart plans to open at least 20 smaller-format Neighborhood Market grocery stores in California in the next year.

Target sells groceries at more than 200 of its California stores.

Supervalu has suffered sharp losses in the last two years, including $1 billion in fiscal 2012 and $1.5 billion in fiscal 2011.

In 2010 it reported a profit of $393 million.

Albertsons spokeswoman Lilia Rodriguez declined to comment on how many workers would lose their jobs or be moved to other stores because of the latest cutback.

“A number of employees are members of the union, so it depends on their collective bargaining agreements,” Rodriguez said.

Albertsons had announced in June that it would lay off 2,500 workers in Southern California and Nevada to reduce costs amid weakening sales.

Supervalu, based in Eden Prairie, Minn., operates about 4,400 stores nationwide but has not been as aggressive as other chains in slashing prices to woo customers.

In July, after reporting a plunge in first-quarter earnings, the company said it would consider selling part or all of its businesses. Supervalu also replaced its chief executive at the time with its chairman of the board.

Supervalu shares closed Wednesday at $2.28, up 4 cents. From a high of nearly $50 in mid-2007, the stock has shriveled more than 95%.

The company said it would record a pretax charge of $80 million to $90 million this fiscal year to cover severance and related expenses because of the closures.

The company said it would generate about $80 million to $90 million in cost savings over the next three years.

“These decisions are never easy because of the impact a store closure has on our team members, our customers, and our communities,” Wayne Sales, Supervalu’s chief executive, said in a statement.

The largest number of store closures are in California, said Mike Siemienas, a Supervalu spokesman. Locations also are being closed in Oregon, Washington, Pennsylvania, New Jersey, Maryland, Indiana, Alabama, Georgia, Illinois and Missouri.

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Albertsons closings

The parent company of the Albertsons supermarket chain announced that 18 stores in Southern California are to be shut down. A store in Culver City closed last month.

Anaheim: Brookhurst & Katella

Buena Park: Dale & La Palma

Covina: Azusa & Cypress

Fullerton: Harbor & Imperial

Garden Grove: Harbor & Garden Grove

Glendale: Central & Chevy Chase

Hacienda Heights: Colima

Long Beach: 7th & Redondo

Los Angeles: South

La Brea & Rodeo

Moreno Valley: Pigeon Pass & Ironwood

Norco: Hamner & Hidden Valley