Dive Brief:
- United Natural Foods, Inc. (UNFI) has reached agreements to sell 13 of its 43 Shoppers Food & Pharmacy stores to three different grocery operators, according to a company release. The sales are expected to close by late February. As part of the deal, two out of the three buyers will enter long-term agreements to have UNFI serve as the main supplier for the acquired Shoppers locations.
- UNFI will shut down four additional Shoppers stores by January 2020. The retailer decided not to renew the leases of three of the locations and the fourth is being canceled under an agreement with the property's landlord.
- To prepare for its sale, Shoppers will wind down operations by selling any remaining inventory at the stores for sale and waiting for the transaction to finish before the new operators reopen the locations.
Dive Insight:
Like its Farm Fresh sale last year, UNFI's divestiture of Shoppers was always going to be a piecemeal affair given the density of the Mid-Atlantic region and the financial constraints chains in the region face.
Shoppers hasn't been a strong performer in recent years, but its stores operate in coveted locations and have full-service capabilities, including fresh and frozen departments and storage. Although UNFI didn't disclose which operators it sold to, Ahold Delhaize's Giant Food banner has been snapping up stores in the region, including five Shop 'n Save locations purchased last year from UNFI.
In April, UNFI closed Shoppers' 30 pharmacy locations and sold inventory along with customer records to Walgreens and CVS. The remaining stores' union workers have pushed the company for further transparency on the chain's sale, and executives to this point have remained tight-lipped, saying only that deals were in the works. In October, UNFI said it planned to sell off all its Shoppers stores by early 2020.
Since it acquired Supervalu last summer, UNFI has been determined to offload its retail assets. Last year, it sold most of its Shop n’ Save stores to Schnucks, offloaded its Hornbacher’s chain to Coborn’s and divided Farm Fresh among several buyers, including Harris Teeter and Food Lion. UNFI has said its remaining major chain, Cub Foods, will be sold by the end of next year.
"We believe that exiting the retail business will further accelerate our business transformation and allow us to more appropriately allocate resources toward long-term growth initiatives,” said Steven L. Spinner, UNFI's chairman and CEO, said in a statement.
UNFI adjusted its long-term outlook in October, saying it won't be able to hit its goal of around $28 billion in annual net sales and $900 million in adjusted EBITDA by 2022. The company says it will use the proceeds from the sales of Shoppers and Cub Foods to lower its debt. Because of cost savings, the retailer’s debt is currently less than $3 billion.
Below are the locations of the 17 locations included in UNFI's Friday announcement.
5600 The Alameda, Baltimore, Maryland 21239 - Sold
6500 Eastern Avenue, Baltimore, Maryland 21224 - Sold
2371 Solomons Island Road, Annapolis, Maryland 21401 - Sold
5722 Ritchie Highway, Brooklyn Park, Maryland 21225 - Sold
10864 Sudley Manor Drive, Manassas, VA 20109 - Closing
3831 Bladensburg Road, Colmar Manor, Maryland 20711 - Sold
4801 Marlboro Pike, Capitol Heights, Maryland 20722 - Sold
7051 Martin Luther King Jr Highway, Landover, Maryland 20785 - Sold
22599 MacArthur Boulevard, California, Maryland 20619 - Sold
8212 Liberty Road, Baltimore, Maryland 21244 - Closing
6111 Livingston Road, Oxon Hill, Maryland 20745 - Sold
3801 Richmond Highway, Alexandria, Virginia 22305 - Closing
7858 Quarterfield Road, Severn, Maryland 21144 - Closing
9274 Old Keene Mill Road, Burke, Virginia 22015 - Sold
6881 New Hampshire Avenue, Takoma Park, Maryland 20912 - Sold
1170 Smallwood Drive W, Waldrof, Maryland 20603 - Sold
2201 Randolph Road, Wheaton, Maryland 20902 - Sold
