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POSSIBLE STRIKE LOOMS AT SAFEWAY, ALBERTSON'S

SAN FRANCISCO -- Safeway, Pleasanton, Calif., and Albertson's, Boise, Idaho, last week were preparing for a possible strike by more than 22,000 employees and members of nine local chapters of the United Food and Commercial Workers Union in northern California.The two retailers bargained here as a single employer unit with the local chapters, hoping that the two parties could reach an agreement prior

Martin Schneider

September 3, 2001

2 Min Read
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MARTIN SCHNEIDER

SAN FRANCISCO -- Safeway, Pleasanton, Calif., and Albertson's, Boise, Idaho, last week were preparing for a possible strike by more than 22,000 employees and members of nine local chapters of the United Food and Commercial Workers Union in northern California.

The two retailers bargained here as a single employer unit with the local chapters, hoping that the two parties could reach an agreement prior to the Sept. 1 deadline.

"We have been bargaining in good faith with all nine locals, and we are hopeful we will reach a settlement that benefits both parties soon," Stacia Levenfeld, spokeswoman for Albertson's, told SN late last week.

Levenfeld noted that the two companies began posting "help wanted" signs in store windows in the event of a strike, and also noted that the companies have been searching stores in other regions for managers that could be flown in to the strike region in the event of a prolonged strike.

The local unions involved are UFCW Locals 101, 120, 373, 428, 648, 839, 870, 1179 and 1288.

Ron Lynn, spokesman for the union, said in a published statement that the primary sticking point between the two parties is wages.

The union is seeking a raise of a minimum of $1 an hour, and is also demanding that certain part-time jobs be made into permanent positions, union officials said.

Analysts have followed strikes at these two companies before, and noted substantial charges per share during prolonged strikes.

Ed Comeau, managing director at Credit Suisse First Boston, New York, stated that "Safeway faced a 47-day strike from a warehouse operator in northern California last October and November. That action resulted in a fourth quarter 2000 charge of 13 cents per share."

"While we do not suggest that the current event is directly comparable, it does demonstrate how potentially damaging a labor strike can be," Comeau added.

Jonathan Ziegler, managing director of Deutsche Banc Alex. Brown, New York, has expressed a more positive stance on the situation.

"Stockholders have called and said they want to dump Safeway stock. But I don't think you should necessarily rid a good company from your portfolio simply because it's hitting a rough patch," Ziegler said.

Ziegler did note, however, that the company can certainly suffer from a strike of any length.

"Sure, strikes have the potential to hurt a company's stock price. Safeway had a nine-day strike in the past that accounted for a drop in quarter earnings per share of 1.25 cents," he said.

"But the final point to consider is you just don't know what the outcome will be going into a situation like this," Ziegler added.

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