Albertson's Inc. said it plans to close 165 stores and eliminate as many as 20 percent of its administrative and corporate jobs to revive profit growth.
The nation's second-largest supermarket chain, Albertson's has 23 grocery stores in the Tampa Bay market. It rated fourth in local supermarket customer traffic, according to the 1999 Scarborough Report, a market research study.
The exact number of jobs that will be eliminated had not been determined, said Ertharin Cousin, Albertson's senior vice president for public relations and government affairs. Albertson's has about 235,000 employees, of which about 8,000 fall into the targeted categories. That could mean the elimination of up to 1,600 jobs.
Albertson's did not identify the stores to be closed over the next year beyond calling them unprofitable. About a quarter of them will be drugstores, which Albertson's operates under the Osco Drug and Sav-On names.
"We are not exiting any significant markets," said chairman and chief executive Larry Johnston in a conference call. "These 165 stores are spread across 25 states."
Johnston, formerly the president of General Electric Co.'s appliance division, took over in April as the first Albertson's chief executive hired from outside the company.
He said the steps are long overdue. Profit has fallen or been little changed in the past six quarters as the company struggled to integrate American Stores, which Albertson's bought for $12.5-billion in June 1999.
The company will consolidate its operating divisions to 15 from 19 and offer buyouts to employees with 20 or more years of service in corporate, divisional and distribution jobs.
"He's making tough, dispassionate decisions for the benefit of the company's future and that is to be welcomed," Merrill Lynch analyst Mark Husson said.
Albertson's said the cuts will help reduce annual expenses by $100-million. While the store closings will trim $1.4-billion from annual revenue, Albertson's hopes to make up much of that through 80 new stores scheduled to open in 2001 and an estimated $380-million earned by selling the property. In fact, Johnston said he expects sales will rise to about $38-billion in the year ending Jan. 31, compared with $36.8-billion in fiscal 2001.
Johnston said in the call that the company could have more store closings and charges as it continues evaluating its business. Analysts said the company should consider leaving markets such as Houston and areas of Florida and Colorado where it doesn't have No. 1 or No. 2 market share.
"They're going to be operating in some orphan markets that probably aren't going to be very profitable," Deutsche Banc Alex Brown analyst Jonathan Ziegler said.
Shares of Albertson's rose $2.73, or 9.5 percent, to $31.55. They had dropped 8.9 percent in the past year, compared with a 13 percent gain for industry leader Kroger Co.
_ Times staff writer Mark Albright contributed to this report, which includes information from the Associated Press.