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|Montreal Gazette 26 Jun 2014 at 12:00|
Grocery store chain Sobeys Inc. will close about 50 underperforming stores across Canada following its $5.8-billion acquisition of Safeway.
The company made the announcement in an earnings release on Thursday from Empire Inc., parent company ofSobeys.
"During the fourth quarter of fiscal 2014, Sobeys completed a detailed full review of its retail store network," the company said. "Based on this detailed review, Sobeys has determined that consistently underperforming stores, representing approximately 50 stores ... and 3.8 per cent of the total retail network gross square footage will close."
About 30 of the stores are in Western Canada, the company said, without divulging any more details about specific locations. But CIBC analystPerry Caicco, who covers the company, said in a research note "it is probable that 20 of these closures will be in the terrible Ontario market."
The store closures will "strengthen the quality of our store network and is expected, along with other initiatives, to enhance overall performance and net earnings,"CEO Marc Poulin said.
The 213 stores it acquired in the Safeway deal are in Western Canada and the Competition Bureau has already ordered Sobeys to sell 23 stores.
The move comes as Sobeys and other grocers are finding their margins squeezed as well-financed U.S. players such as Wal-Mart and Target set up shop here.
The company made the announcement as its earnings results showed profit up slightly to $131.3 million and revenue up to $5.94 billion just shy of expectations.