Posted on: Saturday, January 31, 2004
Calif. strike may cost Safeway boss his job
By Michael Liedtke
Associated Press
SAN FRANCISCO — Safeway Inc. chairman Steve Burd, a strong-willed chief executive who once ordered his supermarket workers to be cheerful, has little to smile about.
His slumping company is embroiled in a costly 3-month-old grocery strike in Southern California, where he is vilified by labor leaders, and his support is slipping on Wall Street. Nearly two-thirds of Safeway's market value has evaporated in the past three years, wiping out more than $20 billion in shareholder wealth.
Four top Safeway executives have left for other jobs in the past 13 months, raising concern about a leadership void at the nation's third-largest grocer. Analysts now wonder openly whether Safeway's board should end Burd's nearly 11-year tenure as CEO.
"As right as he was for the company at one time, he may be the wrong guy now," said CL King & Associates research director Gary Giblen, who hailed Burd as the chain's savior in the 1990s.
Morningstar analyst Mark Hugh Sam believes the rising tensions in the California strike could force Burd to step down.
"He is very vulnerable right now," Sam said. "The labor situation is making it very difficult for Safeway to be led by Steve Burd. He has built an antagonistic relationship with the very same people who he is going to need to increase his stores' service component to remain competitive."
The company said Burd, 54 won't make public remarks until Safeway's Feb. 12 earnings report.
Analysts believe the California-based company is losing at least $20 million a month in Southern California, where workers angered by increased employee healthcare contributions struck its Vons and Pavilions stores.
Grocery giants Kroger Co. and Albertsons Inc. locked out their workers in a show of unity and are negotiating jointly with Safeway. The conflict has kept 70,000 Southern California workers off the job since Oct. 11.
Labor leaders are convinced Burd is pushing for a hard bargain. "Steve Burd is pursuing such an extreme course that it could destroy the company," said Greg Denier, a spokesman for the United Food and Commercial Workers union.
