Profits Fall, Stores Close: Grocery Chains and Bush's Ownership Society

A few new owners of the Albertsons grocery chain are responding accordingly. In early June, three companies purchased Albertsons Inc. for the tidy sum of $17 billion.

One of the trio, Cerberus Partners, an investment firm based in New York, partnered with the commercial real estate firm of Kimco Realty Corp. To halt a fall in profits for Albertsons during the past four years, 100 of its stores nationwide will be closing, 37 of which are located in Northern California.

These "under-performing stores" did not bring an acceptable return on investment to owners, according to Albertsons spokeswoman Quyen Ha. And the consequences for Albertsons employees?

How many of them will become jobless is not yet known. Contrast their bitter fate with that of Larry Johnston, CEO of Albertsons.

Mr. Johnston earned about $60 million as Albertsons shareholders lost around $900 million between 2000 and 2003, said Graef Crystal, a business professor at UC Berkeley, in a report on KTVB NewsChannel 7, the NBC station in Boise, Idaho on July 8, 2003. Nice work if you can get it.

Albertsons competes for profits and market share in the grocery industry with discounter Wal-Mart Stores Inc., owned by the Walton family of multi-billionaires. Their wealth is built on the backs of Wal-Mart's hourly work force, which earns lower wages than unionized Albertsons workers.

As the good Marxists in corporate America know, low wages plus high productivity boost profit rates. Driven thusly, grocery companies compete to undersell their rivals and put them out of business.

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