Safeway Inc, the nation's third-largest supermarket chain, plans to close 26 Randalls/Tom Thumb stores in Texas in order to revitalize its operations in the state.
Safeway's profit dropped in the 2005 third quarter to $122.5 million, compared with $159.2 million a year earlier. The company had third quarter 2005 sales of $8.95 billion, a 7.3% gain from $8.34 billion in the same quarter of 2004.
“This is a necessary step toward a healthier Randalls/Tom Thumb,” said Steve Frisby, division president, Steve Frisby. “We are committed to improving our business in Texas. Closing these underperforming stores will enable us to execute a more focused and productive Lifestyle store remodel program.” He described the new Lifestyle format as having more perishables and a large selection of natural and organic foods, full-service meat counters and bakeries, floral design centers, as well as sushi bars and olive bars.
The stores — 16 in the Houston market, nine in Dallas/Fort Worth, and one in Austin — are expected to close by the end of 2005. After these closures, Randalls/Tom Thumb will continue to operate 62 stores in Dallas, 36 in Houston, and 14 in Austin.
Randalls/Tom Thumb said many of the affected employees would be eligible for severance benefits and outplacement services.