Say goodbye to Dominick’s grocery stores.
Safeway Inc., which operates 72 Dominick’s stores in the Chicago area including the ones in Naperville, will be exiting the market by early 2014, the company announced Thursday.
“We expect to use the cash tax benefit and any other cash proceeds from the disposal of Dominick’s properties to buy back stock and to invest in growth opportunities,” Safeway said in a news release.
Dominick’s employs 6,600 in its 72 stores throughout the Chicago area, with the “vast majority” unionized workers, said Safeway spokesman Brian Dowling.
A memo sent to employees Thursday said a “small group” of Dominick’s stores have been sold and that Safeway is working to identify buyers for the remainder of the operation.
Later on Thursday, Safeway announced it had sold four of its Dominick’s stores to New Albertsons, Inc., which operates Jewel-Osco grocery stores.
The four stores are two Chicago stores at 1340 S. Canal Street and 2550 N. Clybourn Avenue, one in Homer Glen, and another in Glenview. Other stores are expected to be snapped up by Dominick’s competitors.
For a short time, the four stores will operate under the Dominick’s banner until Jewel-Osco can convert them to Jewel-Osco stores, according to Safeway.
“The company anticipates having plans in place for the remainder of the stores by the early 2014,” Safeway said in a statement. “Over the years we have worked hard to strengthen Dominick’s position in the Chicago market. While we have made some progress, it has not been enough to justify further investment.”
Rumors have been rampant for years that Safeway sought to sell the Dominick’s chain, with the rumbles growing louder after Safeway’s three-year-long battle with Dominick’s unions over a contract.
Dominick’s workers approved new contracts in November 2005 that ended the three-year contract battle in which workers threatened to strike and Safeway agreed to sell the chain and then reversed that decision.
Safeway closed 26 Chicago-area Dominick’s stores from 2004 to 2007 to jettison the stores with slow sales.
One year later, in 2006, Safeway started a major renovation campaign to turn the remaining Dominick’s into “lifestyle” stores more akin to Whole Foods.
Dominick’s also stepped up marketing gift cards for retailers as diverse as Nordstrom, Bass Pro Shops and rival grocery stores.
The gift-card program, which is now partly owned by Safeway and partly publicly traded, has proven lucrative, and epitomized parent company Safeway’s efforts to create new, quick-moving and technologically savvy subsidiaries to boost revenues. The strategy dramatized how former Safeway CEO Steve Burd, who retired in May, sought to reinvent the traditional grocery store company by incubating fast-growing subsidiaries with no unionized labor and with a national presence.
Dominick’s incurred losses before income taxes of $13.7 million in the third quarter of 2013 and $35.2 million in the first 36 weeks of 2013.