Stop & Shop strike cost company up to $110M in profits
FBN's Ashley Webster on Stop & Shop reaching a deal with striking workers.
Stop & Shop’s parent company warned Thursday that an 11-day employee strike will cost the grocery chain up to $110 million in profits in 2019.
Netherlands-based Ahold Delhaize said the strikes, which affected more than half of Stop & Shop’s 415 stores, would hurt operating profits by between $90 million and $110 million. The company said that strike led to “lower sales, increased shrink of seasonal and perishable inventory and additional supply chain costs.”
More than 31,000 employees staged an 11-day strike this month to protest a proposed labor contract that they said would reduce take-home pay while increasing healthcare premiums. Stop & Shop executives reached a tentative agreement with union representatives to resolve the strike earlier this week.
“I am pleased that Stop & Shop’s management and the five local unions have tentatively reached a fair and responsible contract in which all Stop & Shop associates are offered pay increases, eligible associates have continued excellent health coverage and eligible associates have ongoing defined benefit pension benefits,” Ahold Delhaize CEO Frans Muller said in a statement. “I know that both Stop & Shop management and its associates are proud to welcome customers back and look forward to taking care of them every day.”
In addition to the hit to operating profits, the company said it now expects earnings per share to grow by a low single-digit percentage, rather than an earlier projection of high single-digit growth. Ahold Delhaize said it would provide more details about the strike’s impact on May 8 in its first-quarter earnings release.
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The Stop & Shop strike affected stores in Connecticut, Massachusetts and Rhode Island. Democratic presidential candidates Joe Biden, Pete Buttigieg and Elizabeth Warren all expressed support for the strikers.