Raley's Considers Additional Closings

WEST SACRAMENTO, Calif. — Raley's Supermarkets [3] here said it is considering closing additional stores if it cannot reach an agreement with the union to reduce costs and eliminate operating losses.

The 130-store chain disclosed plans last month to close two Northern California locations.

"Our inability to implement necessary reductions has already cost our company more than $6 million in the four months that have passed without an agreement," Michael M. Teel, president and chief executive officer, said in a memo to employees that was released publicly. "We have confronted the union with our stuggles and even shared a list of unprofitable stores that we need to consider closing to enable us to reduce our operating losses."

To emphasize the need for cost-cutting, Raley's said it would negotiate individually with the United Food and Commercial Workers Union on new contracts — apart from Safeway [4] and Save Mart [5]. It met with union representatives on its own fr the first time Thursday and Friday and plans to schedule additional meetings going forward, the company told SN Friday.

John Segale, a public relations specialist hired to speak for Raley's during negotiations, said Raley's opted to break from the other two chains "because there is more urgency on our end than on the other retailers to reach an agreement. We hope to union will see this as a sign we're serious about negotiating."

In his memo Teel said cost-cutting was necessary "to be able to operate more competitively and preserve the future viability of our company."

He said the union's unwillingness to accept its proposals was the reason the chain decided last month to close the two stores. "We told the union we could avoid store closures and save jobs by quickly reaching an agreement," he wrote. "I believe we could have found a way to keep those stores open if we had been able to reach an agreement in December. However, the information we shared seemed to fall on deaf ears. The union is dragging its feet and ignoring our pleas for cost savings."

Raley's contracts with UFCW Local 8-Golden State and Local 5 expired at the end of September but have been extended — until Feb. 29 for Raley's and its Nob Hill subsidiary and until April 29 for its Bel Air subsidiary. The union contracts with Safeway and Save Mart have been extended until Feb. 24.

In a recorded message, Jacques Loveall, president of Local 8-Golden State, said overall talks are continuing "at a very slow pace." He could not be reached for further comment.