Contact: Lori Willis

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Sept. 8, 2005

East St. Louis Schnucks Store to Stay Open

Schnucks will Anchor New Koman Properties Development

EAST ST. LOUIS, Ill. - Leaders of Schnuck Markets, Inc. today announced an agreement with new landlord Jim Koman that will end months of speculation and enable the East St. Louis Schnucks store to remain open.

Koman, president of Koman Properties, recently purchased the State Street Shopping Center from Illinois Land Trust. As the new landowner, Koman has agreed to extend a "no rent" lease agreement to Schnucks in exchange for a commitment to operate for at least five years. Koman said, "I am pleased to have Schnucks anchor the new development I envision for the community. Now that a quality grocer is solidly on board, we can follow through with planned upgrades and expansion of the existing center and the addition of new stores making this plaza a one-stop shopping destination for the entire community."

According to Koman, the deal would not have gone through without the work of East. St. Louis City Council Member Dr. Karen Cason, who helped to secure the approvals needed for the allocation of approximately $1.8 million in funds from the city's Tax Increment Financing (TIF) budget in support of the project. The funds are to be repaid by real estate taxes generated within the redevelopment area, which includes not only the shopping center but also surrounding Koman enterprises.

Koman says the project is already underway with renovation scheduled for the store interior and roof. According to Gordon Lyons, Schnucks vice president of supermarket development, Schnucks plans include expanding its pharmacy operation to allow for a drive through. Lyons says, "We will start making improvements to the property this fall.

Schnucks Chairman and CEO Craig Schnuck said, "What started out as tough decision to close a store has turned into a win-win proposition benefiting Schnucks associates, our customers and the entire East St. Louis community. Thanks to recent operational changes, we were able to promote or transfer some associates to positions in other stores and generate new jobs and new revenue within the East St. Louis community."

According to Schnuck officials, the store, located at 2511 East State Street, has operated at a loss since it was purchased in 1995 as part the National Acquisition. Company leaders felt the operation lost the potential for recovery when in 1999 and in 2000 city officials subsidized stores of competitors in the area. A combination of this competitive disadvantage, high labor costs and poor sales led to the decision to close the store last October.

Schnucks leaders are optimistic that newly negotiated agreements with the city, the new landlord and members of Local 534 will help the store overcome operating deficits. Schnuck said, "Our goal has always been to continue serving our East St. Louis customers now and into the future. We are very appreciative of Jim Koman's efforts in support of that goal and in bringing this latest retail development opportunity to the community of East St. Louis."

Schnuck added, "It is our hope that the new lease agreement will enable the store to break even and within time become profitable and an even more valuable part of the community. This is an aggressive goal in a community challenged by population declines; however, we have a strong store team and a loyal customer base. If we are successful in encouraging East St. Louis residents to keep their grocery dollars in their community, I believe we can keep the store open for a long time to come."

Schnuck also acknowledges the help of Senator James Clayborne, Representative Wyvetter Younge and other city and state officials who worked diligently to keep the store open. "Most importantly, I thank our own store associates for their patience and particularly the members of Local 534 who deserve credit for making alterations to their own labor contracts in order to continue serving customers." Schnuck added, "Union President William Falbe and the workers in our East St. Louis store are to be congratulated for their forward-thinking approach to this very unique situation."

"In order ensure our ability to effectively compete for customers now and in the future, they took an unprecedented course of action that is already bringing relief to labor costs at that location. In exchange for their cooperation, they now have a new contract that will allow them to personally benefit once the store becomes profitable," said Schnuck.

In the coming months, company representatives and union leaders will work together to define the details of the proposed profit sharing plan. In the meantime, Schnuck says all associates in the store as well as residents of the community will benefit from having a quality grocery store that is also an economically viable business in the heart of the community.

Koman agrees and said that keeping the supermarket open is the first step to attracting new business to the area. "The Schnucks store is key to adding retail around the property and to rebuilding neighborhoods throughout the city," he said.

Founded in St. Louis in 1939, Schnuck Markets, Inc. currently operates 103 stores (including five Logli stores) and 99 pharmacies in Missouri, Illinois, Indiana, Wisconsin, Tennessee, Mississippi and Iowa. The family-owned company ranks 94th in the Forbes magazine listing of the nation's "Largest Private Companies."

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