SUPERVALU INC. (NYSE:SVU) revealed today its plans to eliminate 1,100 jobs from its corporate and store-support employees in an effort to improve its business. The company also announced that it would not fill existing positions and open jobs.
For more than three years, the supermarket’s sales have been declining due to strong competition from Wal-Mart Stores, Inc. (NYSE:WMT), and the expansion of thrift stores such as Family Dollar Stores, Inc (NYSE:FDO), and Dollar Tree, Inc. (NASDAQ:DLTR).
In a statement, Sam Duncan, president and chief executive officer of SUPERVALU INC. (NYSE:SVU) said, “The decision to reduce our workforce, although difficult because of the impacts to our people, is the necessary next step in the rebuilding of our business. This move is an important part of our strategy to be more focused and efficient in our operations, including how we staff and support our three business units going forward.”
The supermarket operator completed the sale of its grocery stores including Albertsons, Jewel, Acme, and Shaws/Star Markets as well as its in-store pharmacies Sav-on, and Osco on March 21, 2013 to AB Acquisition LLC, an affiliate of Cerberus Capital Management for $100 million cash and $3.2 billion debt assumption.
Symphony Investors, a consortium of investors led by Cerberus Capital Management acquired 11,686, 406 shares of SUPERVALU INC. (NYSE:SVU) for $4 per share. The company also issued 42,477,692 million new shares with approximately $170 million market value to Symphony Investors under the terms of its transaction. Symphony Investors became the largest stockholder of Supervalu with 21.2 percent interest in the company.
According to Supervalu, its remaining business requires “significantly fewer corporate and store support roles and functions to restructure its business and expenses.” The supermarket operator said the final working dates of individuals affected by its workforce reduction depend on the needs of the businesses and areas they support. All employees whose employment will be terminated will be provided with severance and outplacement services under the Supervalu eligibility guidelines.
In addition, the SUPERVALU INC. (NYSE:SVU) said its workforce reduction does not affect its store level employees and SAVE-A-LOT, its hard discount retail chain.
Furthermore, the company said, “Going forward, SUPERVALU INC. (NYSE:SVU) is a more focused and efficient wholesale and retail operation, with three key business units consisting of Independent Business, SAVE-A-LOT and five strong regional retail banners.” The company expects its three business units to provide strong foundation and to generate $17 billion revenues annually.