by Christopher Freeburn | October 11, 2013 9:36 am
Shares of Safeway (SWY) surged almost 6% in Friday morning trading after the supermarket operator said it is putting its Dominick’s chain of grocery stores up for sale.
The move will mark the withdrawal of Safeway from the Chicago area. Safeway’s CEO called Dominck’s a “noticeable drag” on the company’s financial performance. Safeway says it will sell as many Dominick’s locations as possible and that there is “significant interest” in Dominick’s assets among potential buyers, Reuters notes.
There are currently 72 Dominick’s stores in the region, down from 116 when Safeway acquired the chain for $1.2 billion in 1998.
In the latest quarter, Dominick’s accounted for pre-tax losses of 3 cents a share for Safeway.
Earlier this year, rival supermarket operator SuperValu (SVU) also exited the highly-competitive Chicago market.
Over the summer, Safeway agreed to sell its Canadian operations to Canadian grocer Sobey’s in a deal valued at $6 billion.
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