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 of Sobeys.
"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 analyst Perry 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."
Sobeys' parent company says it will close four Sobeys locations in Calgary as well as one Safeway store there in the coming months.
- Sobeys Deer Point, 14939 Deer Ridge Drive S.E.
- Sobeys Fairmount, 9919 Fairmount Drive S.E.
- Sobeys Douglas Square, 11520 24 Street S.E.
- Sobeys London Town, 3545 32 Avenue N.E.
- Glenmore Safeway in Ogden, 7740 18 Street S.E.
A store on Front St. in downtown Toronto was also shuttered on Thursday. 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.
The store closure plan will come with a restructuring charge of $169.8 million
It also upped its dividend 3.8 per cent to 27 cents a share.