The pending acquisition of American Stores Co. by Albertsons should not result in the shutdown of American's new 25-story office tower downtown nor in wholesale layoffs of its 2,000 employees.
Steve Mannschreck, chief human resources officer of American Stores, told the Salt Lake Area Chamber of Commerce Board of Governors on Tuesday that the systems that American Stores has in its $100 million building are state of the art and Albertsons does not have the systems to absorb them."So American Stores will have a strong presence here for some time to come," said Mannschreck.
Earlier this month, Salt Lake-based American Stores agreed to be acquired by Boise-based Albertsons Inc. in an $8.3 billion deal that would make Albertsons the largest food and drug chain in the United States.
The merger is subject to federal regulatory approvals - it is expected to draw anti-trust scrutiny from the Federal Trade Commission - and is scheduled to close in the first quarter of next year.
American Stores spokesman Dan Avonek said Tuesday that the company is currently in the government-mandated "quiet period" and he could not comment on how the deal is progressing until the proxy statement is issued. That is expected in two months.
The merger called into question the fate of the company's new headquarters building and the employees who work in it. There was initial speculation that the announcement would cause wholesale defections by workers who would want to leave as soon as they find other jobs, ahead of anticipated layoffs.
American Stores chairman and CEO Victor L. Lund said Aug. 3 that there was "no doubt" that some of the employees would lose their jobs in the merged company but that the number hadn't been determined.
But Zvonek said most people are staying to this point. "I would suspect there have been very few people leave," he said.
Mannschreck told the Chamber board Tuesday that other companies - he mentioned WalMart - have been coming into Utah to hold job fairs and attempt to hire away American Stores employees - particularly information technology workers - "who are feeling insecure."
Meanwhile, Tuesday, American Stores announced second-quarter earnings of 32 cents per share, down 0.03 percent from the same period last year.
Total sales increased 3.9 percent to $5.0 billion for the quarter and same-store sales increased 1.8 percent over the 1997 second quarter.
Earnings per share for the first 26 weeks of 1998 totaled 56 cents, up 0.27 percent from last year, which included one-time charges of 14 cents in the '97 first quarter. The charges stemmed from the secondary offering of shares owned by former American Stores chairman L.S. Skaggs and his family and the sale of the company's communications subsidiary.
Sales for the first half of this year increased 1.4 percent over the same period last year while comparable store sales rose 1.4 percent.
Gross profit margin in the second quarter decreased 0.30 percent to 26.7 percent. The company cited promotional spending in its food stores for the slight decline.
Commenting on the second quarter results in a prepared statement, Lund noted that total and comparable store sales logged "solid increases."
"Comparable store sales in our food stores improved from last quarter, reflecting the effects of our marketing and capital spending programs. Comparable store sales in our drug stores were outstanding and reflected strong pharmacy sales"
Lund said supermarket competition in its Acme and Lucky markets remained strong in the second quarter, keeping food prices low and depressing profit margins.
"However, our Jewel Food division reported excellent results and the positive effects of our expense control initiatives in our drugstores are beginning to take hold and should help to improve profitability going forward."
Lund said he expects earnings for all of this year to come in between $1.26 and $1.32 per share, a 10-15 percent increase over 1997, and he looks for continued growth in food and drug store sales "as we cycle into softer prior-year comparisons, continue to control costs and realize increased profits in our newer stores."
The company opened 13 new stores, remodeled 13 others and closed 13 stores during the second quarter, increasing retail square footage by 7.9 percent from the start of the year.
Also Tuesday, Albertsons reported second-quarter profits up 17.3 percent thanks in part to rebounding same-store and comparable-store sales.
Profits for the three months through July totaled $128.4 million, up $17.8 million from the first quarter and $19 million from the second quarter of 1997. The second-quarter earnings translated into 52 cents per share of common stock, 7 cents per share better than the first quarter and 8 cents over year-earlier results.
Quarterly sales of $4 billion were 8.5 percent better than the $3.7 billion Albertsons reported during last year's second quarter.
Same-store sales for the company, which opened 18 supermarkets in the second quarter, were up 0.6 percent. Comparable-store sales, including replacement stores, increased 0.8 percent.
Albertsons also is completing the purchase of Buttrey Food and Drug Stores Co., and on Monday it announced the completion of the purchase of 15 Bruno's Inc. stores in the Nashville and Chattanooga, Tenn., areas.