In announcing Thursday that it would exit the Chicago market where it operates 72 Dominick’s stores, Safeway said it already has sold four of those Dominick’s stores to New Albertsons Inc., which operates Jewel-Osco stores.
The four stores are located at 1340 S. Canal St. and 2550 N. Clybourn Ave., both in Chicago; 14200 S. Bell Rd., at 143rd, in Homer Glen, Ill.; and 1340 Patriot Blvd. in Glenview, Ill.
During the transition period, which the companies said will be “short,” the stores will continue to operate under the Dominick’s banner until Jewel-Osco can complete the conversion to Jewel-Osco. Dominick’s will work 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.
The decision to exit the Chicago market by early next year was reached after the end of the Pleasanton, Calif.-based Safeway’s third quarter. Dominick’s incurred losses before income taxes of $13.7 million in the third quarter and $35.2 million in the first 36 weeks of 2013.
In accordance with generally accepted accounting principles, Dominick’s net assets have not been classified as held for sale on the third quarter balance sheet and its operations have not been included in discontinued operations. The company anticipates that Dominick’s will be accounted for as a discontinued operation in the fourth quarter of 2013. Safeway said it expects to use the cash tax benefit of $400-$450 million and any other cash proceeds from the disposal of Dominick’s properties to buy back stock and to invest in growth opportunities.
“The decision to sell Canada Safeway and to exit the Chicago market is consistent with Safeway’s priority of maximizing shareholder value,” said Robert Edwards, Safeway’s president and CEO. “These actions will allow us to focus on improving and strengthening our core grocery business. We are continuing to review all of our businesses to optimize our allocation of resources, improve sales and grow operating profits.”
In June, Safeway announced that it would sell its Canadian operations to Sobeys Inc.
On Thursday, Safeway also announced the company’s overall third quarter results. Details can be found here.
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