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In a series of conference calls yesterday – according to one source, one-way calls during which store directors were allowed to listen but not speak – the management of the Albertsons LLC stores now owned by an investment team headed up by investment firm Cerberus Management Inc. informed their employees of some 100 store closings, all of which will take place by August 2006.

The East Bay Business Times reports that 37 stores are slated to be closed or sold in Northern California, all of them said to be “under-performing.” Company officials said that the closing stores represented 22 percent of the company fleet in Northern California, but only 12 percent of sales; once the stores are shuttered, it will leave Albertsons with 131 stores in Northern California. Specific store addresses were not immediately made available, but sources tell MNB that they range from small to large locations and are located in a variety of demographic areas.

"Concentrating our resources on a base of solidly performing stores will allow Albertsons to be more competitive and better serve the community," Donna Robbins, president of Albertsons’ Northern California division, said in a statement.

Albertsons also announced that it will close eight "underperforming" stores in Florida, which will leave it with 96 stores in that state. Company spokesman Shane McEntarffer told the Pensacola News Journal that “the eight stores being closed have been under-performing for several years, and account for only 4.8 percent of sales over the past year.”

According to McEntarffer, “This new business strategy will enable us to provide our shoppers better value and an enhanced shopping experience.”

Meanwhile, the Denver Post reports that Albertsons will close 16 stores in Colorado that it operates both under its own banner and as Grocery Warehouse stores. The story was related there in much the same way that it was elsewhere: “The company said the closure of the 16 ‘under-performing’ stores will allow it to focus and invest on the remaining 52 stores it owns.”

And, the Post reports, “While the stores slated for closure make up 23 percent of the company's Rocky Mountain division stores, they have accounted for only 13 of sales over the past year.”

Elsewhere in the company, the song was the same. Albertsons announced that it will close 30 stores in Texas, Louisiana and Oklahoma, which it said made up 16 percent of its fleet there but represented just nine percent of sales. Nine stores will be closed in Phoenix, which the company said made up 10 percent of its Southwest division fleet, but less than six percent of sales.

Where possible, Albertsons reportedly will endeavor to sell the locations and leases to other retailing entities.

The Cerberus team had owned 661 Albertsons stores for exactly four days when it started announcing the closings. It was just last Friday that it closed on the deal, at the same time as CVS was acquiring about 700 drugstores and Supervalu was buying more than 1,100 stores from the entity that used to be known as Albertsons Inc.
KC's View:
What this means for the long-term future of the stores that Cerberus continues to own is unclear, though there remains a lot of discontent within the ranks at the moment. One source told MNB yesterday, “This shouldn't have come as a surprise as the division was bought by a real estate speculation company. Nonetheless, turmoil and uncertainty will continue to affect employees’ morale, dedication and performance.”

No kidding.

We have to believe that if Cerberus and its partners were only interested in making a real estate play, they wouldn’t have hired Bob Miller away from Rite Aid to lead the company; there was a lot cheaper and less expert talent available if all they wanted to do was run a yard sale.

So, for the moment, let’s assume that the only interest here is in getting rid of the low-hanging rotting fruit. Seems like a pretty good moment to engage in a little more Larry Johnston bashing…

Not gratuitous bashing, mind you. It just occurs to us that here you have Cerberus having to unload roughly 10 percent of the fleet of stores that it purchased because they were underperforming. Which means that Johnston – with all his highfalutin bluster about Six Sigma and creating a climate of excellence – didn’t exactly get the job done while at Albertsons. (At least not for these stores.) And then, he didn’t even do what his GE mentor Jack Welch would have done – close the underperforming stores himself.

That $120 million severance package looks more like a joke with every passing day.