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Safeway is divesting its Dominick’s stores
October 11th, 2013
PLEASANTON, Calif. – Safeway Inc. will leave the Chicago market by early next year, selling as many of its Dominick’s supermarkets as it can.
Dominick’s has been a drag on Safeway’s results as its worst-performing division and a drain on its resources, chief executive officer Robert Edwards said in a conference call with analysts.
Safeway acquired Dominick’s 15 years ago for about $1.2 billion plus debt. The chain had 116 stores and $2.6 billion in sales, and was hailed by Safeway for its "enviable reputation as a leading retailer in the Chicago region." Dominick’s remaining 72 stores incurred losses before income taxes of 3 cents per share during the latest quarter.
Safeway has seen "significant interest" since it began marketing Dominick’s assets, Edwards said. Safeway yesterday announced the sale of four Dominick’s units to New Albertson’s Inc., the operator of Jewel-Osco supermarkets.
Exiting Chicago is the latest move in Safeway’s plan to focus on its core markets. It expects to close the sale of its Canadian operations to Empire Co., parent of Sobeys, during the fourth quarter.
Safeway’s third quarter net income fell 58% to $65.8 million from $157 million in the year-ago period. The company earned 10 cents per share from continuing operations excluding an impairment charge related to a warehouse information software project, below analysts’ average forecast of 16 cents per share, according to Thomson Reuters.