SAFEWAY SEES STRIKE HURTING ITS EARNINGS

GLEN A. BERES

OAKLAND, Calif. -- Safeway here said it expects the United Food & Commercial Workers Union strike -- now in its second week -- to have an adverse effect on second-quarter sales and operating results.

Although observers said the economic effects of the strike have probably been minimal to Safeway thus far, a prolonged job action could curtail results in the period ending in late June, observers agreed. Last week, the walkout had been confined to 208 Safeway stores in northern California. But Lucky Stores and Save Mart locked out 14,000 UFCW workers from 180 and 17 locations, respectively, in a show of solidarity with Safeway. All three operators had the same basic bargaining agreement with UFCW.

The operators vowed to keep

their doors open and were manning their stores with management staff and temporary workers last week.

UFCW officials have threatened to extend the strike to other areas of the country. Safeway has more than 900 stores nationwide and UFCW has 1.3 million members.

Labor leaders and representatives from the chains met late last week with the head of a joint labor management committee to try to negotiate a settlement.

All told, 32,000 UFCW grocery store checkers, clerks and butchers and 405 stores have been affected by the walkout, which began on April 6. The union's collective bargaining agreement expired March 4.

The dispute has centered on proposed union concessions and givebacks in the areas of wage increases and health benefits.

The operators claim they are seeking to reduce labor costs because of high health care premiums for employees and competition from discounters.

"Lucky, Safeway and Save Mart are trying to compete with nonunion retailers as well as alternate-format warehouse and club stores," according to Mark Murray, a spokesman for the companies. "The unions know that 'market share' for the employers translates into union members for them, yet these same union locals turn around and bargain less costly union contracts with the competition."

The union, however, has countered that the concessions are being sought without justification from a management group unwilling to negotiate.

"There has been no indication whatsoever that the employers have changed or will change their position on their attempt to devastate your contract through their adamant demands for [givebacks] and concessions," Jack Loveall, regional spokesman for UFCW, told union members in a statement.

Gary Vineberg, vice president of equity research for Merrill Lynch, New York, said he expects the strike to be a prolonged one.

"A lot of people are portraying the union's threat [to extend the strike nationwide] as rhetoric, but I don't think it's out of the question," he said. "This looks like it's going to be a long, tough one."