Food Lion Closing 11 State Stores
The Food Lion grocery chain, which once entered the state with a roar, is closing 11 of its 19 Oklahoma stores, officials said Friday.
The closings, part of a nationwide restructuring, come after nearly two years among some of the toughest competition in the country.
While the Salisbury, N.C., company is not singling out the Southwest - officials said the chain plans to shut 88 stores across the nation in 1994 - more than half of the store closings are in Oklahoma and Texas, officials said.
Central Oklahoma closings include stores at 11001 N Rockwell; at 801 Canadian Trail Drive in Norman; and in Midwest City and Yukon.
Four stores are closing in Tulsa, Broken Arrow is losing two and Owasso one.
The Oklahoma stores will close between mid-March and July 1, Joe Hall, Food Lion's vice president of marketing said from the company's corporate headquarters.
"I think that re-opening them is unlikely," Hall said. "That's not to say we are leaving the Southwest. We are still very committed to Oklahoma and Texas. " In addition to the Oklahoma closings are 36 stores in Texas where Food Lion first probed the Southwest in 1991. That leaves 46 Food Lion stores in the Lone Star state.
Nobody can say Food Lion was not warned, said Ron Frost, a spokesman for the Oklahoma City-based food wholesaler Fleming Cos.
Inc. "When they announced they were coming to Oklahoma, we felt like they were entering an area that was already over-stored and highly competitive," Frost said.
Among industry insiders, the Phoenix, Ariz., area generally is considered the most competitive grocery market in the nation, but Oklahoma is certainly next, Frost said. In Oklahoma, Fleming supplies many of the independent grocers that meet Food Lion head-on.
"It behooves you to be very efficient and a good operation here," he said.
Lisa Sykes, at Oklahoma City-based Homeland Stores, a chain sometimes characterized as Food Lion's principal competition in Oklahoma, declined to comment on the closings.
Homeland has been struggling to stay competitive. It recently won wage and benefit concessions from union workers to boost its profit margin.
Talk of Food Lion closings surfaced in November when the company filed a gloomy third quarter report with the Securities and Exchange Commission, saying "Stores in the Southwestern market are not profitable. " In a prepared statement Friday, chain President Tom Smith said, "This move comes as a result of a careful and company-wide review of store performance designed to focus our resources on our most productive stores. " Smith said an Oklahoma Food Lion employment base will be trimmed to 400 before July. Smith said employees who do not receive other jobs with the company will receive a severance package.
Reports in November put the employee number in Oklahoma as high as 950.
Hall said some may go to new jobs created when Food Lion opens as many as 50 new stores nationwide in 1994 - although none are planned for Oklahoma or Texas.
"We thought the market in Oklahoma and Texas would be very, very good growth markets for us, and quite frankly we still think that," Hall said. "The things that made the market attractive to us are still there. " The national layoff affects 1,300 full-time and 2,200 part-time employees. How many will lose their jobs is unknown, Hall said.
In stock trading Friday, Food Lion Class A shares closed at $7.13 a share, unchanged from Thursday.
Food Lion, which operates about 1,000 grocery stores in 14 states, said the closings reflect poor performance at individual stores. The company had a net increase of 84 stores in 1993.
"It's clear that some of their far-flung areas may have some stores that will never reach the company's standard levels of profitability," said Tom Thomson, a grocery analyst with Wheat First Securities in Richmond, Va.
The announcement came as Food Lion reported that same-store sales, or sales in stores open during a comparable period a year ago, rose 2.9 percent in the 1993 fourth quarter from a year earlier. For the year, the company said, same-store sales dropped 2.6 percent.
Fourth-quarter sales totaled $2.4 billion, up 5.6 percent from the $2.3 billion reported last year.
Total sales for the latest year were $7.6 billion, up 5.8 percent.
The Associated Press contributed to this report. BIOG: NAME: