SYRACUSE, N.Y. -- Penn Traffic Co. here has notified employees at 23 Bi-Lo stores in eastern Pennsylvania that it plans to close those stores within 60 days, according to representatives of United Food and Commercial Workers Union Local 1776, Philadelphia. The union said last week Penn Traffic will close the 23 stores between Jan. 2 and Jan. 15 but will keep 13 other area units open -- albeit with fewer employees per store -- in hopes that it can find buyers for them.
Penn Traffic declined to discuss plans for store closures with SN last week. "We intend to operate all stores for the foreseeable future," a spokesman told SN.
In other developments last week:
* Local 1776 said it has decided not to move forward with a proposal to buy the Bi-Lo units through an Employee Stock Option Plan.
* Penn Traffic said sales continued to drop during the third quarter ended Oct. 31. * Observers said they are not sure how much Joseph Fisher -- who takes over today as Penn Traffic president -- can do to reverse the company's sales declines.
* Giant Eagle, Pittsburgh, may acquire some of the Bi-Los Penn Traffic has up for sale in western Pennsylvania.
Penn Traffic announced in June it was seeking buyers for 78 Bi-Lo stores in Pennsylvania. Three have subsequently been sold, and nine have been closed, the company said.
Local 1776 had expressed an interest in acquiring most of the balance, in partnership with Pittsburgh-based UFCW Local 23; however, when Local 23 decided last month not to participate in the ESOP, "we determined it was not practical to do it by ourselves," Wendell Young 3rd, president of Local 1776, told SN last week.
"We knew the deal was in trouble when we lost Pittsburgh, and we couldn't come up with something without them," he explained.
Bryan M. Noel, a union spokesman, added that most of the eastern Pennsylvania stores that Local 1776 represents "are lower-profit stores, and to form an independent company with those stores would have been risky because there was no assurance the stores had a chance of surviving, and we decided it was not worth the risk."
Noel said Penn Traffic sent notices to 1,200 of the 1,700 members of Local 1776 who work at the 23 Bi-Los, in compliance with the Worker Adjustment and Retraining Notification Act, which requires employers to give 60 days' advance notice of major layoffs or closings. According to Noel, Local 1776 and Penn Traffic were in arbitration last week regarding severance pay for workers who will be laid off and to discuss details of the successorship clause if the stores are sold to a non-union operator. "We're also trying to help laid-off employees find jobs with other employers we represent," he added.
Regarding 30 Bi-Los in western Pennsylvania, members of Local 23 agreed late last month to set aside some contract language that restricted Penn Traffic's ability to sell the stores, in return for extended unemployment benefits and a more liberal severance program.
Industry observers were speculating last week that some of the Bi-Los in western Pennsylvania could be sold to Giant Eagle. Giant Eagle could not be reached for comment last week, and Penn Traffic officials declined to discuss potential buyers.
Penn Traffic has released preliminary sales results for the third quarter and 39-week period ended Oct. 31, which showed sales down 5% to $690.6 million for the quarter and 5.4% to $2.1 billion for the year to date, while same-store sales fell 3.7% for the quarter and 4.1% for the 39 weeks.
The company said it expects to report full third-quarter financial results Dec. 10.
When the company named Fisher as its new president 10 days ago, it said his "ability to consistently increase sales in a traditional supermarket setting is exactly what Penn Traffic needs to do at this time." Fisher said at the time he would focus on marketing stores "so we can stabilize, then grow our sales. We have a strong base [of customers]. All we have to do is bring more customers back into the stores and provide them with a superior level of customer service."
Fisher succeeds Phillip E. Hawkins, who observers said concentrated on cutting costs before his resignation last August after less than 17 months on the job.
Gary Hirsch, Penn Traffic chairman and chief executive officer, "You have to start with one person. You can't get to two or three until you have one." Hirsch told SN Fisher meets the company's needs. "He's a good strong leader and a qualified, experienced CEO who understands the grocery store business in the Eastern United States and who has been successful building sales in a competitive environment running a leveraged company."
"But you're not going to see any instant, quick changes. Joe is a very thoughtful, analytical, calm individual, and it's those attributes that will ultimately make him as successful at Penn Traffic as he has been at other companies."
