* Operators include Albertsons, Ralphs and Vons
* Grocers parent companies are Supervalu, Kroger, Safeway
* S. California hosted bitter supermarket strike in 2003
(Adds analyst comment; updates shares)
By Lisa Baertlein
LOS ANGELES, Sept 19 Albertsons, Ralphs and
Vons and the union representing their Southern California
supermarket employees reached a tentative agreement on a new
labor contract on Monday, averting a threatened strike.
Negotiators for the United Food and Commercial Workers
union said the new contract, which must be approved by union
members, will cover 62,000 union supermarket workers in
Southern California when it is ratified.
"The agreement increases wages, protects health care and
pension benefits throughout the life of the three-year
contract," the UFCW said in a statement.
The the deal came after a negotiating session lasting more
than 24 hours. Specific details were not released.
Southern California is one of the most competitive food
retailing markets in the United States. Many analyst see the
region as a trend-setter for the rest of the industry.
Parties to the latest talks were involved in a bitter
141-day strike in Southern California that spanned 2003 and
2004. It was the longest work stoppage in the history of the
U.S. grocery industry, costing an estimated $1.5 billion in
lost sales to competitors and permanently shifting the
loyalties of some shoppers.
Since that time, nonunion food sellers ranging from
Wal-Mart Stores Inc (WMT.N), Costco Wholesale Corp (COST.O) and
Target Corp (TGT.N) have been chipping away at their overall
market share. At the same time niche players, ranging from
upscale grocer Whole Foods Market Inc (WFM.O) to ethnic chains
and even dollar stores, have taken a bite.
"We are pleased to have reached a tentative settlement
agreement with the union that continues to preserve good wages,
secure pensions and access to quality, affordable health care -
while allowing us to be competitive in the marketplace," the
grocers said in a joint statement on Monday.
Analysts said both sides had something to lose in the event
of a strike. That is because such standoffs can accelerate
store closures, contribute to market share losses and,
ultimately, reduce the number of union jobs.
"The contract is probably mutual pain and compromise," BB&T
Capital Markets analyst Andrew Wolf told Reuters.
The shares of Kroger Co (KR.N), which operates Ralphs
stores, closed up 0.04 percent at $22.38 amid a broader market
sell-off prompted by European debt fears.
Vons owner Safeway Inc SWY.N finished down almost 0.2
percent at $17.67.
Albertsons parent Supervalu Inc (SVU.N) saw its volatile
shares fall 3.5 percent to close at $7.42. Supervalu -- which
has been cutting workers, closing stores, selling assets and
paying down debt -- has lagged many of its rivals in recent
years and could least afford a strike.
The UFCW, frustrated over unproductive negotiations on
wages and healthcare, increased pressure on the supermarkets
when it canceled its extended contract, effective Sunday night.
That action opened the door for it to call a strike and sparked
(Reporting by Lisa Baertlein; editing by Richard Chang, Tim
Dobbyn and Andre Grenon)