Wednesday, August 15, 2012

Pension risks run high for supermarket companies

According to a report released earlier in the week by Fitch Ratings, the "big three" supermarket chains face the largest risk of all U.S. businesses for cash flow and earnings problems due to underfunded pension plans.

Fitch Ratings says that Supervalu, Safeway and Kroger's pension plans are significantly underfunded. The ratings company also states that in the long term, these plans "could grow at a rate that cannot be fully offset by smaller increases in wage rates or healthcare costs, resulting in a creeping increase in overall labor costs."

Supervalu's brands in the Greater Philadelphia market include Acme and Save-A-Lot. Safeway is the parent company for Genuardi's, which is in the process of exiting the market, and Kroger does not have stores in the market.

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