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Safeway announced yesterday that it plans to close 26 underperforming stores in Texas.

Sixteen Randalls stores in the Houston area and nine Tom Thumb stores in the Dallas-Fort Worth area are slated to be shuttered, as well as one Randalls store in Austin.

"This is a necessary step toward a healthier Randalls/Tom Thumb," Steve Frisby, president of Safeway’s Texas division, tells the Austin Business Journal. "We are committed to improving our business in Texas. Closing these underperforming stores will enable us to execute a more focused and productive Lifestyle store remodel program."

The closures are expected to be completed by the end of the year.
KC's View:
Quite frankly, what surprised a lot of people about this announcement was the fact that it wasn’t about Safeway selling off the entire Texas division.

Unknown at this point is whether such a broader move is still in the cards – whether Safeway is getting rid of dead wood in order to make the division more appetizing to a potential suitor.

The Lifestyle store remodel program is a good idea, though it also remains to be seen whether it is enough to rescue a company that has made its share of missteps in recent years. There are plenty of folks who still believe that the Lifestyle strategy doesn’t address the company’s biggest problem – its need to centralize operations to the extent that local appeal often is lost.

We hope that Safeway is making these moves in the interest of stronger long-term operations, and that it is successful. A strong Safeway is good for competition and good for the industry…which seems more important than ever as Albertsons limps towards a possible sale of some or all of its assets.