EAST PROVIDENCE, R.I. (WPRI) – Stop & Shop’s parent company revealed Wednesday the 11-day strike of union workers at their Southern New England stores resulted in more than $300 million in lost sales.
Ahold Delhaize, the Netherlands-based company that owns Stop & Shop and other brands, announced Wednesday that the strike had a direct net sales impact of roughly $224 million. The company estimates stores went on to lose an additional $121 million during the subsequent recovery period.
The company had previously estimated the strike would mean a $100 million hit to its underlying operating profit, a figure Ahold Delhaize stuck with in its second-quarter report.
“Although our results were impacted by the strike at Stop & Shop, our other U.S. brands continued their strong performance,” said Frans Muller, president and CEO of Ahold Delhaize. “As we continue to see sales performance improve at Stop & Shop, we expect no significant impact from the strike in the second half of the year.”
Burt Flickinger III, managing director at Strategic Resource Group, a New York-based consumer industry consulting firm, said the strike was “devastating and surprising” for Stop & Shop, but the company is doing the right things to try and recover from it.
“Stop & Shop has made a lot of smart moves to mitigate the effect of this strike in that their promotional programs are very powerful, they’ve lowered their prices on advertised items, they’re remodeling and expanding their stores,” he told WPRI 12.
But Flickinger said his firm has found many of Stop & Shop’s major competitors have retained 10% of the customers and sales that they gained during the strike, suggesting roughly one in 10 of the supermarket chain’s former customers were lost permanently due to the strike.
“Stop & Shop’s loss is continuing pain for Stop & Shop, and the gain for almost all of Stop & Shop’s food retail competitors,” he said.
The strike of roughly 31,000 United Food and Commercial Workers International Union (UFCW) members began on April 11, effectively shuttering 240 stores in Massachusetts, Rhode Island and Connecticut during what would have normally been a busy shopping period leading up to the Easter and Passover holidays.
The strike came after months of failed negotiations over a new contract. Workers decried proposed changes to their health and retirement benefits while Stop & Shop representatives insisted they were offering an excellent deal.
The strike ended 11 days after it began when the unions and market announced they had struck a tentative agreement that would preserve health care and retirement benefits and time-and-a-half pay on Sundays for current workers. The contracts also include pay raises.
Ahold Delhaize said it anticipates underlying operating margins to be slightly lower this year compared with 2018, and predicts the strike will keep growth of earnings per share to the low single digits. Overall, the company said its sales performance is improving.
Separately Wednesday, Ahold took the opportunity to highlight its recent decision to open a new fresh food processing facility at Rhode Island’s Quonset Business Park next month. The facility formerly belonged to Ireland-based Greencore, which abandoned it last year after a bacteria outbreak.
“The facility will be used to prepare fresh food items, including cut fruits and vegetables, grab-and-go salads, sandwiches, wraps, and other fresh food items for the deli and prepared food sections,” Ahold said. “It will also include a Culinary Innovation Center to test new recipes for fresh own-brand food products and meal solutions.”
The Quonset facility will initially serve Stop & Shop and Hannaford stores.