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Sobeys to close 50 stores; Safeway addition boosts Q4 sales

Sobeys said Thursday that a store network review in the wake of its Canada Safeway acquisition led to a decision to close 50 underperforming stores.

Jon Springer, Executive Editor

June 26, 2014

2 Min Read
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Sobeys said Thursday that a store network review in the wake of its Canada Safeway acquisition led to a decision to close 50 underperforming stores.

Around 60% of the stores to be closed are located in Western Canada. The stores represent around 3.8% of the company's total retail square footage and 1.9% of its total sales.

"This rationalization will strengthen the quality of Sobeys' store network and is expected to improve net earnings as a result of cost savings; however it will result in a reduction in future sales of approximately $400 million," the company said in a statement.

Sobeys said expenses associated with the closures resulted in charges of approximately $160 million (U.S.) to fourth quarter earnings.

Sobeys announced the closings as part of the fourth-quarter earnings announcement of parent company Empire Cos. The company for the quarter ended May 3 said sales improved by 39.5% to $5.5 billion (U.S.) boosted almost entirely by the addition of Safeway Canada.  Same-store sales improved by 0.2%.

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Expenses related to the closure reduced earnings in the quarter to around $1.4 million (U.S.) — down from $96 million in the fourth quarter last year.

For the fiscal year, Sobeys reported sales of $19.6 billion (U.S.) an increase of 20.6% from last year. Excluding the effect of Canada Safeway, sales for the year were up by 2.2%.

 

About the Author

Jon Springer

Executive Editor

Jon Springer is executive editor of Winsight Grocery Business with responsibility for leading its digital news team. Jon has more than 20 years of experience covering consumer business and retail in New York, including more than 14 years at the Retail/Financial desk at Supermarket News. His previous experience includes covering consumer markets for KPMG’s Insiders; the U.S. beverage industry for Beverage Spectrum; and he was a Senior Editor covering commercial real estate and retail for the International Council of Shopping Centers. Jon began his career as a sports reporter and features editor for the Cecil Whig, a daily newspaper in Elkton, Md. Jon is also the author of two books on baseball. He has a Bachelor of Arts degree in English-Journalism from the University of Delaware. He lives in Brooklyn, N.Y. with his family.

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