Sobeys to Close 50 Stores Across Canada
STELLARTON, NOVA SCOTIA - Facing declining earnings and underperforming stores, Sobeys announced today that it will be closing roughly 50 of its stores, 60% of which are located in Western Canada, in efforts to improve future earnings.
A statement released by Sobeys' parent company Empire Co. said that this move “logically follows” Sobeys' recent $5.4 billion retail acquisition from Safeway. This purchase brought 213 new full-service grocery locations into Sobeys' retail network in Western Canada.
CBC News reports that by July 5, the Foodland outlets in Amherst, Tracadie, Perth-Andover, Edmundston and Nashwaaksis will be closed. The St. Stephen location and many others are expected to follow.
“We reviewed our network of stores, as we do, on a market-by-market basis and as a result of that made the decision to close a group of six stores in the Atlantic region that have consistently been underperforming,” said Sobeys Atlantic spokesperson Shauna Selig.
According to the Wall Street Journal, the store closures will cost almost $170 million Canadian dollars and is expected to reduce future sales by around $400 million Canadian dollars. Empire Co. hopes however that despite the costs, the closures of these stores will improve it's net earnings in future quarters.
Selig added that Sobeys will strive to make sure its employees in the closed stores will find work elsewhere in the company or be given severance pay.
"The decision to close stores is always difficult and it's never taken lightly," she said. "We think about the impact it has on the customers, the staff and the community."
According to a press release, Empire Co. had adjusted net earnings from continuing operations of $1.5 million, $0.02 per diluted share, in the 2014 4th fiscal quarter. This is in comparison to $102.5 million, or $1.51 per diluted share, from last year.
Stay tuned to AndNowUKnow for updates on this developing story.
