15 Southland Ralphs Markets to Be Closed

By Ronald D. White

March 18, 2004 12 AM PT

Times Staff Writer

Kroger Co. said Wednesday that it would close 15 underperforming Ralphs supermarkets in Southern California in the next two months as it girded for competition with Wal-Mart Stores Inc.

Kroger said it would try to transfer the 600 employees to other Ralphs markets and that layoffs were unlikely. The company said the closings were unrelated to the 4 1/2-month supermarket strike and lockout that recently was settled.

“We are taking these steps after extensive and careful review,” Ralphs President John Burgon said in the statement. “None of these stores generates enough sales, nor has enough customers, to pay for the increasing cost of their operation.”

Wal-Mart, which plans to open about 40 grocery supercenters in California in the next four years, has significantly lower labor costs than rival supermarkets because it is non-unionized.

Greg Conger, president of Local 324 of the United Food and Commercial Workers union, did not dispute Kroger’s statement that the closings are not strike related. Conger said he had been in meetings where Kroger promised to relocate the affected workers to other Ralphs stores.

“They are telling them how wonderful it is to have them back and all sugar and spice. We will see how it plays out, but that is exactly what they are telling the members,” Conger said. Union members were asked to list the top three stores they would prefer to be transferred to, he said.

About 59,000 UFCW members were idled after the union struck Vons and Pavilions stores in October. Then Albertsons and Ralphs locked out their workers in a show of solidarity. The union later pulled the pickets from Ralphs stores, allowing it to post stronger sales than Vons and Albertsons.

The strike cost Ralphs about $40 million to $45 million in lost sales in the fourth quarter, Kroger said. It is obligated under its mutual-aid pact to share some of its sales with the two chains. Overall, Kroger posted a $337.4-million net loss in the quarter.

Safeway Inc., owner of Vons and Pavilions, said the labor fight added to a $696-million overall loss for the company for the fourth quarter. Albertsons Inc. said it sustained $700 million in lost sales in its fiscal fourth quarter as its overall earnings fell 36% to $130 million.

One analyst said Safeway and Albertsons would probably close more stores than Ralphs as they readied for the Wal-Mart Supercenter openings.

“Ralphs will be able to accommodate many of their employees. Vons and Albertson’s will have great difficulty in doing so,” said Burt P. Flickinger III, managing director of the Strategic Resource Group, a business strategy firm.

Albertsons said Wednesday that it had no plans to close stores.

Kroger shares rose 22 cents to $16.71 on Wednesday in New York Stock Exchange trading.

Ralphs closures

Here are the 15 stores that Ralphs Grocery Co. plans to close in Southern California over the next two months.

* 6336 E. Santa Ana Canyon Road, Anaheim Hills

* 15727 Bernardo Heights Parkway, Bernardo Heights

* 2465 E. Imperial Highway, Brea

* 2959 Chino Ave., Chino Hills

* 1058 E. 3rd Ave., Chula Vista

* 1212 Magnolia Ave., Corona

* 14310 S. Hawthorne Blvd., Lawndale

* 2716 San Fernando Road, Los Angeles