Larry Johnston could never be mistaken for Joe Albertson.
The founder of the Idaho-based grocery store chain that bears his name delighted to be in contact with regular people who shopped the aisles of his stores. When he was looking for a location for a new store, Albertson used to drive around a town and look for the neighborhood with the most tricycles and swing-sets in the yards.
Johnston, chief executive officer of Albertsons since 2001, much prefers to talk to Wall Street.
It was certainly Wall Street he was talking to last Friday when he announced that Albertsons may be liquidated piecemeal, sold off or closed store by store.
Exciting news for stockholders. Dismal news for Idaho.
The gist of Johnston's message was this: Traditional grocery stores such Albertsons can't compete with Wal-Mart and Costco, so Albertsons officials are thinking about going out of business -- or maybe downsizing into a shadow company.
For America's second-largest grocery store chain, that's a questionable premise at best -- Albertsons rival Kroger, the industry leader, manages quite nicely to keep its head above water. The core problem, it seems to us, is not in Albertsons stars, but in its management.
Four years into Johnston's controversial tenure -- his compensation package since 2001 has totaled $76.2 million, according to MSN, while Albertsons shares have lost 39 percent of their value on his watch -- Albertsons still doesn't seem to know what kind of retailer it wants to be. A discounter? A Fred Meyer-style superstore? A specialty grocer?
Case in point is the company's apparent plans -- currently in their seventh year -- to build a new store and gas station on the site of its current Twin Falls store on Addison Avenue.
The Twin Falls City Council in 1998 approved the company's sweeping development proposal. Nearby duplexes were moved off the site. The Mongolian House restaurant vacated its former restaurant space. The Episcopal Church of the Ascension relocated elsewhere in town. The city rerouted a sewer in early 2003 on the premise that Albertsons' construction would follow shortly.
Albertsons received its first building permit for the planned store in July 2003 and a second one a year later. Its latest permit extension expired this summer, and construction still hasn't started. The company gave no reasons for delaying the project.
Joe Albertson, who opened the existing store in Twin Falls, wouldn't have done business that way. If the project hadn't started on time, he would have been on the phone to the mayor the next day to explain why.
It's time for Johnston to come out from behind the cover of his company's public relations department and talk to his customers, employees and neighbors directly about the future of Albertsons. If the CEO's plan is to liquidate the company and sell off its assets piecemeal, he should say so unambiguously.
If his strategy is something else, Johnston needs to articulate it. For at the moment, Albertsons is a company paralyzed by self-analysis.
Idaho stands to lose more than 5,000 jobs -- Albertsons is the state's fifth-largest employer -- if the company goes out of business, but there's more.
Alone among the Gem State's home-grown corporations, Albertsons is the company that is truly iconic to Idahoans -- largely because of the personalities and generosity of its founder and his wife, Kathryn.
Hundreds of Idaho schools have computers because of the Albertsons Foundation. Albertson College of Idaho is the distinguished academic institution it is today because of Albertson money. Albertsons is a company -- and the Albertsons were a couple -- that truly made life better in Idaho.
No one should try to minimize the business challenges that Albertsons faces, but it's not a company without resources. In Idaho, its greatest assets are its high-quality employees and the good will of its 1.2 million Idaho neighbors.
We hope Larry Johnston doesn't throw all that away without a very good reason.
| Our view: Albertsons is straying from its Idaho roots under the leadership of CEO Larry Johnston. |
