BOISE, Idaho -- In a move that could ease some competitive pressures on selected convenience store and gasoline retailers, supermarket giant Albertson’s Inc. has announced its intention to completely exit four underperforming markets--Memphis and Nashville, Tenn., and Houston and San Antonio, Texas. Last week, the company also said it would sell eight stores in southwest Missouri and close a ninth after determining that nine stores was not a big enough presence to compete in that market.
Albertson’s is a major hypermarket gasoline retailer, operating more than 200 fuel centers at various supermarkets nationwide. In early December, when it opened its 200th fuel center, in Weatherford, Texas, the company said it planned to open more than 70 fuel centers in 2002.
“Exiting these under-performing markets finalizes another major chapter in the restructuring of our company,” said Larry Johnston, chairman and CEO, in a statement. “This will now allow us to focus resources on strategic markets that build shareholder value and offer opportunity for significant future growth.”
These market exits will occur through a combination of store closures and store sales. Combined, the markets represent about $1.3 billion in annual revenues, but as a group, they fail to meet or exceed the company’s defined return on invested capital hurdle rate, it said. Division offices in Memphis, Houston and San Antonio will also be closed.
According to company executives during a webcast on Wednesday, in its fiscal fourth-quarter 2001, Albertson’s opened 16 food stores, 10 drugstores and 11 fuel centers; it closed 38 food stores, 95 drugstores and 5 fuel centers. For the fiscal year, it opened 80 food stores, 54 drugstores and 58 fuel centers; it closed 95 food stores, 140 drugstores and 5 fuel centers.
In the cities that Albertson’s is exiting, at least 7 fuel centers will be affected--1 in Memphis (Seessel’s), 4 in Houston (Albertson’s) and 2 in San Antonio (Albertson’s). Several other fuel centers may be affected in surrounding communities.
Albertson’s fuel centers typically include six to eight fueling stations and a small kiosk or a c-store, ranging in size from 1,100 sq. ft. to more than 2,000 sq. ft. The company currently operates fuel centers in 21 states at stores under the banners of Jewel, Acme, Seessel’s and Albertson’s Express. Albertson’s purchases gasoline directly from major oil companies.
“Albertson’s understands our customers lead busy lives,” said John Boyle, Albertson’s director of fuel center and grocery merchandising, in December. “Our fuel centers help them save time by eliminating additional errands, positively impacts their day. Since we opened our first fuel center four years ago, customer response has been overwhelming. We are excited to continue this successful venture that adds both customer convenience and shareholder value.”
Albertson’s, based in Boise, Idaho, is one of the world’s largest food and drug retailers, with annual revenues of approximately $38 billion. The company operates more than 2,400 retail stores in 33 states, under banners including Albertson’s, Albertson’s-Osco, Albertson’s-Sav-on, Jewel-Osco, Acme, Sav-on Drugs, Osco Drug, Max Foods, Super Saver, and Seessel’s by Albertson’s.
