COMPTON, Calif. -- At the end of this week, Ralphs Grocery Co. here is scheduled to complete a plan to lay off about 1,000 employees, or roughly 3.8% of its 26,000-member work force.
The layoffs, announced last week, will affect mostly part-time employees, and no further layoffs are anticipated "at this time," the company reported. Ralphs plans to open 15 to 17 new stores over the next year, and under the terms of the union agreement it's possible that laid-off employees could be recalled during that time, the company told SN. The layoffs are based on seniority under terms of Ralphs' collective bargaining agreement with the United Food and Commercial Workers Union. According to Ralphs officials, the layoffs are "a correction" in the company's work force following last year's merger of Ralphs and Food 4 Less Supermarkets, La Habra, Calif. As a condition of the merger, the company was required to divest 27 Ralphs stores. The company also announced last week that it would close 28 units that are underperforming
or, due to the merger, have market conflicts with existing stores. Because of the closings, hours available to part-time employees dropped from an average of 31 hours a week to 25.5 hours, Ralphs reported. Company officials said they expect an increase in the average hours for store-level employees after the layoffs. According to Al Marasca, Ralphs president and chief operating officer, "The decision was a difficult one. The layoffs are necessary, however, to increase the labor efficiencies in our stores, provide our remaining members with sufficient work hours and to position our company for the next generation of growth. "We feel this action will help provide our members with adequate working hours to sustain their families." The layoffs are "a function of the burden of interest expense" after a leveraged buyout, said Jonathan Ziegler, an analyst with Salomon Bros., New York. "After an LBO, a company needs to sharpen its cost structure, and Ralphs will really have to fine-tune its operations to make them more productive."
According to a high-yield analyst contacted by SN, Ralphs is losing "a lot of customers" at a time when its competitors -- including Vons, Lucky and Stater Bros. -- are reporting higher sales and earnings, he said. "Ralphs will have to scramble because it now realizes its projections were not really accurate, and it's probably going to have to close more stores."