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Vons Will Close Poorly Performing Units in California : Supermarkets: 350 employees will be affected as the struggling chain continues its restructuring plan.

August 06, 1994|GEORGE WHITE | TIMES STAFF WRITER

In a bid to reverse declining sales in California's highly competitive supermarket business, Vons Cos. plans to close nine poorly performing California stores with nearly 350 employees by Aug. 13.

The store closings, confirmed Friday by Vons, will bring to 17 the number of supermarkets closed since the Southland's biggest food chain announced a restructuring plan in November. Vons has also eliminated 250 administrative jobs under the restructuring.

Industry analysts said Vons has been forced to retrench in order to compete on prices with such aggressive supermarket chains as Lucky Stores, Food 4 Less Stores and Ralphs. They said Vons' problems stem from the uniquely tough market in Southern California.

"Vons is a victim of geography," said Jonathan Ziegler, an analyst at Salomon Bros. in New York. "They'd be doing a lot better if they weren't in Southern California."

Since the November announcement, Vons has monitored sales at all of its stores to determine which it should close. The nine-store shutdown is one of the largest multiple-store closings in the local supermarket sector in recent years.

The number of closures exceeds the target of 11 stores announced in November. However, Vons will also have opened seven new, more efficient stores in California by the end of this year.

"More stores failed to meet our financial criteria than expected," said Mary McAboy, a Vons spokeswoman. "The closings allow us to redirect money into new stores that can generate a better return for the company."

Of the targeted stores, six are in Southern California and three are in the central part of the state. One of the affected stores--a Vons in Tulare--closes today at 6 p.m. The remaining stores will be shut down at 6 p.m. Aug. 13.

The Southland stores on the closing list are in San Bernardino, Hacienda Heights, Rialto, Rancho Palos Verdes, Fallbrook and Victorville. The remaining two stores are in the central California communities of Santa Maria and Arroyo Grande.

That will leave Arcadia-based Vons with 320 stores in California and 15 in Nevada.

Vons said some employees at the targeted stores will be offered jobs at other stores, based on seniority and union contracts. Vons has not yet indicated how many people will be offered transfers, but the company said employees who accept the offers could displace workers with less seniority.

Two of the new stores will replace outlets being closed. The Arroyo Grande store to be closed will be replaced in 1995 by a supermarket twice its size. Likewise, Vons plans to replace its targeted Fallbrook supermarket with a larger store in that community in 1996.

McAboy said the new, larger stores attract more consumers. Vons has already opened four new stores in 1994 and plans to open four more later this year. The company last year decided to close under-performing stores and use the cost savings to build new ones and cut prices in hopes of stemming its dramatically declining sales.

Vons has not yet reversed its fortunes. Sales for the six months ended June 19 slipped 2.7% to $2.304 billion compared to the same period last year. The decline in same-store sales--revenue from stores open at least 12 months--was steeper. Earnings for the latest six-month period tumbled more than half to $13.5 million, from $33.6 million.

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