Published on: November 22, 2011
I received the following email yesterday from Monte Peterson, chairman of Salt Lake City-based Associated Food Stores’ Board of Directors, responding to a piece that ran last Friday about layoffs, salary cutbacks and other changes taking place at the company:For some time now, the Board of Directors (made up of independent store owners that are members of Associated Food Stores) has been reviewing all aspects of our company. Neal Berube had been asked to lead a team of executives at AFS to help us identify areas of value and areas within our company that need continuous improvements.
On November 11, 2011 the Board of Directors unanimously elected Neal Berube as President and Chief Executive Officer of Associated Food Stores. At that time the Board also approved and set into action a detailed plan which would allow us to further position the company as a leader in the industry and allow our retailers to thrive in our respective markets.
The leadership had to make some difficult decisions which companies everywhere have been making for the past two to three years. Our leadership values every team member and has been optimistic about a potential economic turnaround. Unfortunately, the global and national economic situation has not turned toward the positive as quickly as hoped.
In coordination with the Board of Directors, AFS leadership made adjustments and 70 positions within the company were affected. We were able to provide opportunities for 42 of the 70 positions as they were transferred from administrative and other supporting functions to merchandising and store-level positions in an effort to invest in retail support. These 42 people represent some of AFS’ best and having them at retail will have a positive impact on our store guests’ experience throughout the holiday season and over the long term. The people, whom we were not able to offer a continuing opportunity, were treated with respect and compassion.
The reality of the situation is we currently hold the number one position in the Utah market with 35% of the share. Our cash flows are strong due in part to a dramatic turnaround at Fresh Market. Much has been said about Fresh Market over the last couple of years. We are proud to say that the Fresh Market store teams have been hard at work looking for ways to improve store operations and their guest experience. Prior to taking over as CEO of AFS, Neal Berube was directly involved in the turnaround during his previous role as President of Fresh Market.
Associated Food Stores has serviced the needs of its member retailers for more than 70 years. We look forward to continuing that legacy for decades to come. Our Board and team members are incredibly optimistic about our new leadership and look forward to working with them during the months and years ahead.
What Mr. Peterson is discreet enough not to mention in his email is that the leadership at AFS was dismayed by my story last Friday and felt strongly that I had not been fair to them in how it was reported and the details that were in the story. I’ve had some time to think about this, and to a great degree I think they are right - and while they have not asked for me to address this issue, I’m going to do so anyway.
The meat of the story was that a) as many as six dozen people had been laid off, b) a number of people have been asked to take salary cuts of up to 25 percent, and c) some of the people laid off were escorted from the building.
I was clear in my reporting that this story came via several sources, but one thing that I was not clear enough about was why I was unable to reach AFS for comment before posting the piece. I wrote that “MNB was informed about the layoffs late last night, and was unable to reach AFS for comment,” but what I meant to convey was that because of the timing of the tip and when I file MNB, and the time difference between New England and Utah, there was nobody I could call to get a comment. It was not like I tried and was rebuffed - and I should have been clearer in my language.
As for the facts of the case ... while there is a small difference in numbers, the original story did not mention that a majority of the people laid off from existing jobs were offered other positions. That’s not what I was told by my sources, but that is the stated position of AFS. The company also maintains that nobody was escorted from the premises, and that there were no significant salary cuts. Again, that’s not what I was told.
Ultimately, AFS feels that if I were doing my job right, I would have held the story for a day or two while checking with them for comment, that it was irresponsible for me to depend on people who might be disgruntled for my information. As I said last Friday, I felt secure about my sources ... and I was as clear as I could be, without revealing names, about where the story came from. That said, upon reflection, I think AFS is right on this one.
If I had it to do over again, or if faced with similar circumstances, I think I would probably make a different decision. One of the things about the internet and forums like MNB is that they make it possible to spread information with amazing speed. But speed for its own sake isn’t always a good idea. As has often been said here on MNB in a number of contexts, just because you can do a thing doesn’t mean you should do a thing
There were elements of my commentary that I think were pretty tough. I wrote then and continue to believe that this is a difficult time of year to impose these kinds of changes, and it can have an enormous negative impact on morale. But let me also amplify on something else I wrote last Friday - which is that sometimes companies and their leaders have to make tough decisions, and there is almost never a good time to take drastic measures. There are bad times and less bad times. And sometimes, life doesn’t give you a choice.
I also believe that AFS is in a time of transition. There has been a change in the company’s leadership, there are changes taking place in terms of staffing and operations, and the company faces enormous challenges - some of them as a result of past decisions, and some of them because of an unforgiving economy. It is my sense that perhaps not everyone in the company is on the same page ... and it is up to current management to get everyone reading from the same hymnal, heading in the same direction. (I know I’m mixing my metaphors here, but c’est la vie
After 10 years of doing this, you’d think that I’d learn not to screw up. But the thing is, I will make mistakes from time to time. I hope they’re mostly small ones. But whether they are small or large, or matters of fact or judgement or opinion, the very least you can expect is that I won’t be defensive about them, and that I’ll be willing to explore my thinking and my actions and consider whether I should have done things differently.
In this case, I should have. Mea culpa, mea culpa, mea maxima culpa.