Vons to Give Up Discount Chain, Boost Pavilions
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Abandoning its stake in warehouse-style retailing, Vons Cos. said Friday it will close all eight of its discount EXPO stores and expand its more upscale Pavilions chain in a bid to boost profits.
The EXPO stores--in Victorville, Cudahy, Huntington Park, Fontana, Colton, El Monte, Montebello and Pomona--are set to close Sunday. The company said it will convert most of the EXPO sites to Vons stores.
“The decision to close the EXPO stores was a difficult one,” said Lawrence Del Santo, Vons’ chief executive. “However, these stores have not produced the financial results required to justify continued operation.”
In announcing the closures, the company also said it plans to expand its 33-store Pavilions chain by adding 15 stores.
The expansion, which will involve new sites and conversion of existing Vons stores, will occur over a two-year period beginning next year, officials said. The Pavilions chain has generated strong sales for Vons in the past two years.
The move by Vons was seen as a sign that the Southland’s largest supermarket chain is conceding the discount market to operators such as the Food 4 Less warehouse chain.
EXPO earnings were disappointing partly because the chain had low name recognition and a small presence in one of the most competitive food retailing environments in the nation, said Jonathan Ziegler, an industry analyst at Salomon Bros.
“Vons decided to focus on the supermarket formats it has handled best because the pressure is on to produce stronger earnings in 1995,” Ziegler said.
The Arcadia-based Vons Cos. operates 319 stores in Southern California and 15 in Nevada. The company said it plans to open 12 Vons stores in 1995.
Launched in 1985, the Pavilions chain offers a wider variety of products and operates primarily in Los Angeles and Orange counties. The EXPO chain, introduced in 1993, has 530 employees, who are paid less than those employed at full-service supermarkets.
Vons said EXPO employees will be given the opportunity to apply for jobs at Vons stores.
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