Contact: Lori Willis

Director of Communications

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Nov. 1, 2004

East St. Louis Schnucks to Remain Open Through Dec. 31

Grocers say union contract combined with promised resources give store a fighting chance

EAST ST. LOUIS, Ill. -- Today, grocery associates at the East St. Louis Schnucks are working under an amended contract that leaders of Schnuck Markets, Inc. say should help give the ailing store a fighting chance for recovery. The store, located at 2511 State Street East, was originally slated to close but will now remain open through the end of the year with a chance for a multi-year extension.

Last Thursday, Oct. 28, a special union vote was held and East St. Louis grocery associates agreed to five percent wage rollbacks on certain job classifications, lower compensation rates for new hires and higher requirements for healthcare eligibility in exchange for a chance to share in future profits.

Craig Schnuck, chairman and chief executive officer, said new contract modifications combined with promised resources pooled by community and civic leaders, should help improve the competitive position of the city's only union grocer. Schnuck said, "Thanks to the support of our Local 534 associates, we were able to ratify one of two contract amendments designed to bring relief from labor costs and enable us to continue serving our East St. Louis customers. Although the amendment will not solve all of the problems, it is a step in the right direction."

Although last week's contract votes included concessions affecting only workers in the East St. Louis Schnucks, all members of the bargaining units were eligible to vote. The grocery clerks at Schnucks' East St. Louis and Cahokia stores ratified their contract by a vote of 36 to 23. The second vote, involving meat and deli clerks from Schnucks, Shop `n Save and Dierbergs failed by a vote of 8 to 36. The meat and deli contract remains unchanged.

The grocery clerks' contract, covering only Schnucks workers in East St. Louis and Cahokia, expired earlier this year and was operating under an agreed upon extension. However, the meat and deli clerks' contract is with The Greater St. Louis Food Employers Council and is in effect until 2007. Talks with meat and deli workers will continue.

Citing high rent, heavy labor costs and low sales, Schnucks leaders originally announced the store would close Oct. 9, but extended the deadline to allow community partners time to pursue other avenues of funding. Labor leaders also reopened contract talks. The split vote could have left the store's future in question; however, Schnuck says by amending their contract, grocery clerks bought the group time to continue pursuing support.

According to Schnuck, over the next two months Developer Jim Koman, of Koman Properties, will work to coordinate funding resources for acquisition and improvements to the building. "Proposed redevelopment efforts will yield benefits that will reduce a portion of overhead expenses and help offset losses," said Schnuck. "We are considering a multi-year commitment, but it is contingent upon our pulling together all parts of this equation. If everything falls into place and customer support is strong, I believe the store will have a fighting chance at recovery."

Bob Flacke, vice president of labor relations at Schnucks, says rollbacks go into effect today and will apply to specific wage classifications, both part-time and full-time. However, the bulk of the savings will come through new hires. "Many of our current, full-time grocery clerks will eventually transfer to other stores and new hires will be brought in at the newly negotiated compensation rates. Although lower, those rates are still among the best in the region." Flacke says those new jobs will go to members of the East St. Louis community.

In accordance with the contract amendment, if business is restored to profitability, grocery clerks will share in the profits (after a minimal return on assets). The profit participation plan normally runs through the fiscal year, however, in this case the qualifying period will begin today. "That way, our associates will not have to overcome additional losses suffered after the store closing was announced. Instead, they can start fresh as customers return," said Schnuck.

"Our primary goals always have been to continue serving our East St. Louis customers and to keep good paying jobs in the community for as long as fiscally possible," said Schnuck. "Thanks to efforts of State Representative Wyvetta Younge, Mayor Carl Officer, City Manager Robert Storman, Mike Jones of the Empowerment Zone and other key leaders, we've come a long way in a very short period of time and there is now renewed hope for the store's recovery."

Representative Younge, who continues to be instrumental in pooling various civic and governmental pledges of support, said, "It is important that we retain the only full-service food and drug store in our community. Schnucks leaders did their part by keeping the store open and compounding their already significant losses. Now, we will work to bring in the funding that is needed." Younge continued, "In the meantime, I am asking all residents of East St. Louis to shop at Schnucks and show their appreciation to Store Manager Ken Hall and the Schnucks organization for their commitment to making East St. Louis a stronger, richer community."

Founded in St. Louis in 1939, Schnuck Markets, Inc. currently operates 102 stores (including five Logli stores) and 94 pharmacies in Missouri, Illinois, Indiana, Wisconsin, Tennessee and Mississippi. The family-owned company ranks 80th in the Forbes magazine listing of the nation's "Largest Private Companies."

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