Sobeys said Thursday that a store network review in the wake of its Canada Safeway acquisition led to a decision to close 50 underperforming stores.

Around 60% of the stores to be closed are located in Western Canada. The stores represent around 3.8% of the company's total retail square footage and 1.9% of its total sales.

"This rationalization will strengthen the quality of Sobeys' store network and is expected to improve net earnings as a result of cost savings; however it will result in a reduction in future sales of approximately $400 million," the company said in a statement.

Sobeys said expenses associated with the closures resulted in charges of approximately $160 million (U.S.) to fourth quarter earnings.

Sobeys announced the closings as part of the fourth-quarter earnings announcement of parent company Empire Cos. The company for the quarter ended May 3 said sales improved by 39.5% to $5.5 billion (U.S.) boosted almost entirely by the addition of Safeway Canada.  Same-store sales improved by 0.2%.


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Expenses related to the closure reduced earnings in the quarter to around $1.4 million (U.S.) — down from $96 million in the fourth quarter last year.

For the fiscal year, Sobeys reported sales of $19.6 billion (U.S.) an increase of 20.6% from last year. Excluding the effect of Canada Safeway, sales for the year were up by 2.2%.

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