Safeway Scales Back in TX

PLEASANTON, CA-Safeway is closing 26 under-performing Texas stores, mostly in the Houston area, as it concentrates its focus on its newer “lifestyle” concept units in the state. The retailer’s executives plan to take a $59-million charge as a result of the closures.

“The competitive environment has softened over the last couple of quarters,” said Steve Burd, Safeway’s chairman, president and CEO, during the company’s conference call highlighting its Q3 results. “We think that the Texas operation is going to be much better; more focused.” The grocer currently has seven lifestyle stores in Texas and plans to have more as it converts its portfolio as a whole. The lifestyle stores in Texas perform in the top 10% of the company’s portfolio, Burd says.

Lifestyle stores feature more upscale departments and renovated interiors. Currently, 313 units in the chain, or about 17% of the company’s store base have been converted. By year’s end executives say they expect that 20% of its nearly 1,800 stores will switch to the newer format.