Albertsons Plans to Close 100 Stores

Supermarket chain Albertsons said Wednesday that it planned to close 100 stores, or about 16% of its locations, because they were not profitable.

The grocer will shut 37 stores in Northern California, 30 in Texas, 16 in Colorado, nine in Arizona and eight in Florida, spokeswoman Stacia Levenfeld said.

The stores are expected to be closed by early August.

The new Albertsons was formed by a group including Cerberus Capital Management, Kimco Realty Corp. and other firms after they agreed in January to buy 661 stores from the former Albertsons Inc.

Buyout firms are purchasing retailers for the value of their real estate and cutting their costs and boosting their revenue before selling the operations to other companies or offering shares to the public.

“The biggest potential sales benefit from the store closures is Safeway, who holds the leading share positions in the Northern California markets where most store closures are slated, although it should also benefit from closures in Colorado and, to a lesser degree, Texas,” New York-based Bear Stearns & Co. analyst Robert Summers wrote in a note.

The investment firms, Supervalu Inc. and CVS Corp. acquired Albertsons Inc. for about $17.4 billion in stock, cash and debt and split the company into three parts.

Safeway, the third-largest U.S. supermarket chain, may pick up as much as $175 million in sales from the closings, Summers wrote. Kroger Co., the biggest grocery company, is expected to gain as much as $70 million in revenue, mostly in Colorado.

Supervalu, owner of the Save-A-Lot chain, bought more than 1,100 Albertsons stores, becoming the second-largest grocer. CVS, the No. 2 drugstore company, acquired all of Albertsons’ 700 stand-alone drugstores.

The 100 locations being closed accounted for 9.7% of sales over the last year, Boise, Idaho-based Albertsons said.