SAN DIEGO -- San Diego-based FedMart Corp. told its 8,000 employees Wednesday the firm will close and liquidate all 46 of its food and variety retail stores 'over the next several months.'
FedMart president Jan W. Heydorn said an orderly liquidation is contemplated.
'It is with sincere regret and disappointment that I must inform you that after extensive deliberation our board of directors has decided to discontinue all retail operations of the company as soon as practicable,' Heydorn told employees in a letter Wednesday.
'I know that this news will be shocking to all of you, especially after all the hard work and sacrifices of the past year,' the letter said. 'However, under current economic conditions, it was the only choice possible.'
The announcement ended weeks of speculation over the future of the financially troubled company, owned by West German billionaire Hugo Mann.
FedMart operates 32 stores in Southern California and 14 outlets in Arizona and Texas. Three-thousand of the 8,000 employees work in San Diego.
Tom Vandeveld, president of Local 1222 of the United Food and Commercial Workers Union, said leaders of the chain's unions will meet with management next week to negotiate a closing agreement on severance pay, accrued benefits and the like.
'The closings are a disappointment and a shock to all of us. FedMart is an institution,' Vandeveld said.
He said it was his understanding that FedMart might retain ownership of some store locations for lease to other operators.
Vandeveld said he assumed all FedMart stores would be shut down by summer.
Mann bought control of FedMart in 1975 from founder Sol Price. A few years later he undertook a massive expansion program, questioned at the time, which resulted in financial difficulties.
Sales have topped $1 billion annually, but the company has not shown a profit since 1978. It reported losses of $25.2 million from the end of 1978 through the quarter ended Nov. 30, 1980, the last quarter reported.
A year ago, Mann bought remaining outstanding shares and converted the company to a private holding.