BOISE, Idaho -- Albertson's pullout from four markets is leading to industry speculation about the fate of the abandoned stores and the future direction of food retailing in those areas.A variety of major supermarket operators are being named as possible acquirers for the units, but it's also possible independents or wholesalers could be the purchasers.Although most of the stores will be up for sale,

BOISE, Idaho -- Albertson's pullout from four markets is leading to industry speculation about the fate of the abandoned stores and the future direction of food retailing in those areas.

A variety of major supermarket operators are being named as possible acquirers for the units, but it's also possible independents or wholesalers could be the purchasers.

Although most of the stores will be up for sale, industry observers told SN they are not sure how many of them may actually have long-term profit potential.

Albertson's, which is based here, disclosed plans over the past couple of months to leave four markets: two in Tennessee and two in Texas. According to the company, specific plans include the following:

In Nashville, it closed five stores Feb. 15, with seven other stores up for sale.

In San Antonio, it closed nine stores March 17, with 20 remaining.

In Memphis, it closed five stores March 21, with 13 others scheduled to be sold or closed.

In Houston, it plans to close 10 stores later this week, with 33 left.

Observers said the closed stores are the most troublesome underperformers, while those that remain in operation are more viable sales candidates.

Gary Giblen, senior vice president and director of research at C L King Associates, New York, said Albertson's would probably prefer to sell the stores in any given market as a single entity rather than on a store-by-store basis "because you always get a better price that way, and it's a more worthwhile value for the buyer to get a meaningful market share."

George Dahlman, an analyst with U.S. Bancorp Piper Jaffray, Minneapolis, told SN he expects Albertson's to move quickly to find buyers for stores in all four markets "because the longer you operate in a closedown mode, the more an operation goes downhill, and Albertson's doesn't want to carry any dead stores."

Albertson's will be more interested in selling the stores than in simply shutting them down, Dahlman added. "But what the company does in the next few months will determine if it's retrenching or retreating," he said.

"In several markets to which Albertson's has gone, its market share has faded away, particularly in the face of competition from Wal-Mart, and it looks like Albertson's is leaving markets where it's gotten beaten up by Wal-Mart, which has the look of a retreat. But we'll see.

"The key is what happens as it allocates resources from the four markets to other areas. If that helps stabilize those other areas or helps generate market share, then it's a retrenchment that works. But if Albertson's pulls out of the four and then decides to pull out of others, it's no longer a retrenchment but a retreat."

Observers said prospective buyers for the Tennessee stores could include Kroger Co., Cincinnati; Bruno's, the Birmingham, Ala.-based division of Ahold USA, Chantilly, Va.; Wal-Mart Stores, Bentonville, Ark.; K-VA-T Food Stores, Abingdon, Va. (doing business as Food City); or either Dallas-based Fleming or Minneapolis-based Supervalu.

According to Lisa Cartwright, an analyst with Salomon Smith Barney, New York, "The most likely scenario in Memphis would be for an independent operator or a wholesaler to buy the stores. Given Kroger's No. 1 position in that market, Kroger would probably have some issues with the Federal Trade Commission, and it's unlikely Safeway would want to enter Tennessee because it lacks an infrastructure in that area.

"But Memphis isn't a particularly attractive prospect for any new player because it could end up with the same problems that have plagued Albertson's -- not enough market share in a market with Kroger as a strong No. 1 and Wal-Mart with a strong presence.

"There might be some companies like [Ahold's] Bruno's, which has contiguous operations [in Alabama, Mississippi and Georgia], that might show some interest, but anyone coming into Memphis would be jumping into a difficult market where it would be stuck in between Kroger at the high end and Wal-Mart at the low end."

Giblen said Ahold might have an interest in expanding into Memphis, since it already has a base of stores in Tennessee -- the former Red Food Stores, based in Chattanooga, that operate under the Bi-Lo banner.

He also said he thought Publix Super Markets, Lakeland, Fla., might want to make the leap into Tennessee, "though a wholesale buyer -- either Fleming or Supervalu -- might be a more logical contender."

Jonathan Ziegler, San Francisco-based managing director for Deutsche Banc Alex. Brown, New York, said the availability of store sites in Memphis could prompt Wal-Mart to break with past practice as it seeks locations for Neighborhood Markets.

"Wal-Mart has already announced plans to open two Neighborhood Markets in Memphis," Ziegler noted, "and if Wal-Mart thinks the market can support more than two of those stores, then it might consider buying some of the Albertson's locations.

"Wal-Mart hasn't acquired stores before, and it certainly wouldn't be interested in all the stores in the market, but it could be interested in selected sites in the 40,000-square-foot range."

A more likely scenario in Tennessee, however, is for a wholesaler to buy the stores, Ziegler said, "and then flip them to various independents."

Observers were less certain who might buy the Albertson's locations in Texas.

H-E-B dominates the San Antonio marketplace and might represent too strong a factor for a new competitor to attempt to enter that market, they said. In Houston, Albertson's has some very strong locations and some very weak ones, they said.

Ziegler said Wal-Mart looked at the Houston stores "and passed."

However, he said there's widespread speculation in Texas that H-E-B could be interested in moving into Dallas through acquisition if Albertson's were to decide to get out of Texas altogether by selling its metroplex stores.

One Texas operator said even the locals are uncertain what will happen with the stores there.

"Some locations, particularly in San Antonio, are more likely to end up with an independent than a chain operator," he told SN, "though it's always possible Wal-Mart will want to acquire some to expand its Neighborhood Market chain, which operates now only in Houston and Dallas.

"But most of the Albertson's are 60,000 square feet, which is 20,000 feet larger than what Wal-Mart wants, so unless they were to develop a larger concept, I don't think they'd be interested."

If Albertson's can't find supermarket operators to take over the Texas stores, it could lease them to other retailers outside the food industry, the operator said.