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November 02. 2012 8:26PM

Shaw's set to cut 700 jobs in N.E.

Shaw's Supermarkets on Friday announced plans to cut about 700 jobs at 169 Shaw's and Star Market stores in five New England states.

About 90 employees affected by the layoffs have already been notified, and the rest will be informed over the next several days, the company said.

"A decision of this nature is never easy, but after careful evaluation, it is unfortunately the necessary step for us to take to help improve our business, reduce expenses and reinvest in more customer-facing initiatives," said Mike Stigers, Shaw's president.

Shaw's, Osco and Star Market are part of the nationwide SuperValu grocery store group. Shaw's employs about 17,000 workers at its stores in New England. The layoffs represent about 4 percent of the New England workforce.

The job cut news comes in the wake of an announcement by Supervalu in July that it is willing to sell Shaw's for the right price, according to the Patriot-Ledger newspaper, which circulates near the company's headquarters in West Bridgewater, Mass.

In February, Supervalu eliminated 60 jobs at the West Bridgewater office as part of an 800-person reduction nationwide. In June, Supervalu also announced layoffs at its Albertsons division in California and Nevada, the newspaper reported.

Shaw's operates 10 stores in New Hampshire, mostly in the southern tier, within the Nashua, Concord and Portsmouth triangle. Company spokesman Steve Sylven would not comment on how many of the layoffs would be implemented in New Hampshire. "We're not breaking it out by state, other than to say the estimated 700 will occur across all 169 stores," he said.

Sylven cited the economy and competition as reasons for the cost-cutting moves. "We continue to operate in a tough competitive landscape," he said. "It's still a challenging economy as well. Both of those things contributed to us experiencing sales losses that made it tough for us to manage labor costs, which is why we've taken this unfortunate step."

SuperValue reported a net loss for the second quarter of $111 million on its entire portfolio of stores. Net sales were $8 billion, down from $8.4 billion for the same quarter a year ago.

David Livingston, a Milwaukee-based supermarket analyst and principal of DJL Research, said Shaw's has been struggling ever since Supervalu acquired the chain as part of its $11.4 billion buyout of Albertson's Inc. in 2006, which made Supervalu the second-largest traditional grocery store chain in the U.S.

"This has been going on for a number of years now," he said. "SuperValue bought them in 2006 and everything has been sour since then. They had inept management. They just got too big. They bit off more than they could chew. They made some acquisitions, and they didn't have the skills to operate the stores, and then they borrowed to pay for it."

Livingston said Shaw's finds itself in the middle of the grocery store market, with chains like Walmart and Market Basket competing on price, while high-end stores like Whole Foods and Trader Joe's build customer loyalty. "You're always going to find your road kill in the middle of the road," he said.

He was skeptical of claims that the economy had anything to do with the store's problems. "In the grocery business, the economy is good all the time," he said. "If you're not doing good in the grocery business, it's not the economy, it's usually because you're not managing it well."

The grocery store chain once operated in all six New England states, but sold its 16 Connecticut stores in February.

dsolomon@unionleader.com

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