June 24, 2009 11:36 PM UTC

About Those Grocery Store Profits...

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• by: Colorado Pols

We talked last week about the overwhelming rejection of the latest proposed contract between King Soopers (owned by Kroger Corp.) and their unionized employees in Colorado. As you know the employees rejected the latest contract by nearly unanimous margins in most areas of the state, a significantly less fractious result than many had anticipated.

As we said before, the employees have done a good job communicating their side of the story in local media, focusing on generally growing and recession-proof profitability in the grocery business to refute management’s assertion that proposed wage freezes and pension cuts are necessary due to the “current economic climate.”

The Denver Business Journal gave the employees’ argument some substantial heft yesterday:

Kroger Co. — parent of Colorado’s largest grocery chain, King Soopers, which is in contract talks with its workers — reported Tuesday that its profits were up 12.7 percent in the first quarter.

Cincinnati-based Kroger (NYSE: KR), the nation’s largest supermarket company, posted a profit of $435.1 million, or 66 cents per share, for the quarter, up from $386 million, or 58 cents last year, a year ago. Analysts had expected earnings of 61 cents a share…

The supermarket chain confirmed its full-year profit forecast of between $2 and $2.05 per share and for same-store sales growth of between 3 percent and 4 percent.

Kind of makes you wonder what the wage and benefit cuts were for, doesn’t it? The longer this dispute drags out, and the more evidence emerges that management doesn’t have any real justification for seeking painful concessions from their workers–even opening themselves to the charge of exploiting the economic crisis to try–the more likely it becomes that public opinion will turn against management. As we’ve said, this dispute has dynamics in play like social networking technology and a robust outreach strategy that didn’t exist in 1996, the last major grocery labor dispute in Denver. The conventional wisdom that complacently assumes nobody’s paying attention, a misconception that guides everything from management’s bad faith to Governor Bill Ritter’s veto earlier this year of House Bill 1170, might get turned on its head before this is over.