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PLEASANTON, Calif. - Safeway Inc. on Monday said it has abandoned the long-delayed sale of its money-losing Chicago supermarket division due to a labor disagreement with a prospective buyer.
The Pleasanton, California-based chain also moved to appoint Randall Onstead as Dominick's president in an effort to improve operations at the troubled division.
Safeway, currently at the center of a crippling supermarket strike in southern California, had been trying to sell Dominick's since last November.
"The unions and the winning bidder have told us they cannot reach an agreement on an acceptable labor contract," said Safeway chairman, president and c.e.o. Steve Burd. "As a result, it makes more sense for us to stop marketing the chain and focus instead on improving Dominicks' operations. Safeway shareholders will be better served by having us operate the stores instead of selling them for an unacceptably low price."
Prior to joining Safeway, Onstead was chairman and c.e.o. of Randall's Food Markets Inc. in Houston. He left the company when Randall's merged with Safeway in September 1999, but remained as a consultant to Safeway and the retail food industry.
"During his tenure as c.e.o. at Randall's Food Markets, he significantly improved the company's operating and financial performance, and greatly enhanced its reputation as one of the finest regional food retailers in the U.S.," said Burd. "Randall brings an important set of skills that make him an excellent fit for Dominick's. He is experienced with acquisitions, as Randall's acquired and successfully integrated Tom Thumb in the Dallas/Fort Worth market."
Burd further described Onstead as "a great merchant and a consumer focused operator" who has experience running stores that are very similar to Dominick's in size and format.
Onstead, who joined Safeway in September and has been working on a range of retail projects, replaces Scott Grimmett, who will become president of Safeway's Denver division.
Safeway shares closed on Monday off 4 cents at $21.06 on the New York Stock Exchange, ahead of the Dominick's announcement.