Safeway Inc has secured the sale of four of its Dominick’s stores in Chicago to New Albertsons Inc for an undisclosed sum.
The US retailer said earlier yesterday (10 October) that it planned to exit the loss-making Chicago market by early 2014. The company currently operates 72 Dominick’s stores in the area.
Releasing its third-quarter results, Safeway revealed that Dominick’s incurred losses before income taxes of US$35.2m in the first 36 weeks of 2013. Safeway expects the move to result in a cash tax benefit of $400-450m, which will be used to partly offset the tax expense associated with the sale of Safeway Canada. Any proceeds from the disposal will be used to buyback stock and “invest in growth opportunities”, the company revealed.
During a “short transition period”, the stores will continue to operate under the Dominick’s fascia. However, Albertsons plans to convert the outlets to the Jewel-Osco banner.
It is unclear how many jobs will be lost as a result of the transaction. “Dominick’s will be working with Jewel-Osco and the unions to ease the transition for store employees, and to facilitate continued employment for as many of them as possible,” Safeway said.
Earlier in the day, Safeway booked a steep drop in net profit for the first nine months of the year and lowered its FY outlook. For the full story, click here.