Strike Leaves Grocers More Vulnerable to Wal-Mart

"Habits are being formed," said Mellet. The grocers are "going to lose some of their customers' core business."

On a long-term basis, Hugh Sam estimates the grocers' Southern California stores could lose 2% to 3% of their sales following the strike. The longer the strike lasts, the bigger the impact could be. (Negotiations between the grocery chains and the union resumed Tuesday after they were suspended prior to Thanksgiving. A news blackout on the negotiations prohibits the parties from discussing their status. A representative for the federal mediator did not immediately return calls seeking comment.)

The strike has already had a significant short-term effect on the grocery chains. Last month, Albertson's withdrew its full-year earnings guidance, citing uncertainties related to the strike. On Thursday, Safeway projected that its full-year 2004 earnings would fall short of analysts' projections even without the direct effects of the strike, which it refused to address.

While Albertson's stock has been largely unchanged since the strike began in mid-October, Safeway's stock has fallen 14.8% and Kroger's has dropped 5.8%. But both Albertsons and Kroger have seen their stock prices rebound since the early days of the strike.

"[The strike] is one more piece of bad news" affecting the grocery chains' stocks, said Duane Roberts, a portfolio manager at Dana Investment Advisors. "But it's hard to identify how much [of the stocks' performance] is strike related and how much is the ongoing struggles of this business."

Dana Investment sold off its grocery chain shares earlier this year and has no position in them currently.

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