A number of big stories came out of the southeastern states in 2013. Many of them involved companies having to regroup and/or sell off their holdings, but there were a couple of bright spots as well, including mergers and strong performance.
Below are 10 of the most noteworthy stories as reported by The Shelby Report of the Southeast this year.
1. Kroger and Harris Teeter sign merger agreement
The Kroger Co. and Harris Teeter Supermarkets announced on July 9 that they had signed a definitive merger agreement in which Kroger would purchase Harris Teeter for approximately $2.5 billion. The deal, expected to close by the end of 2013, was approved by Harris Teeter’s shareholders in October.
Matthews, N.C.-based Harris Teeter operates more than 200 stores in North Carolina, Virginia, South Carolina, Maryland, Tennessee, Delaware, Florida, Georgia and the District of Columbia, in addition to distribution centers for grocery, frozen and perishable foods in Greensboro and Indian Trail, N.C., and a dairy facility in High Point, N.C.
Upon closing of the transaction, Harris Teeter’s common stock will no longer be publicly traded and the company will be a wholly owned subsidiary of Kroger, which has said it has no plans to change the Harris Teeter name or the company’s procedures.
The Harris Teeter acquisition will increase Kroger’s store count to 2,631 in 34 states and Washington, D.C. Sales of the combined companies likely will exceed $100 billion.
2. Belle Foods bankruptcy sparks southeastern shakeup
Belle Foods, which operated 57 stores under several banners throughout Alabama, Georgia, Florida and Mississippi, filed for Chapter 11 bankruptcy protection July 1. The Birmingham-based grocery chain, made up of stores once owned by Bruno’s, was purchased by Bill and Jeff White in early 2012. The father-and-son team bought the company, then called Southern Family Markets, from C&S Wholesale Grocers, which continued to supply the Belle stores. C&S ultimately ended up being Belle’s largest creditor at the time of its bankruptcy filing.
It was another wholesaler, however, that ended up acquiring the bulk of the Belle stores. Associated Wholesale Grocers (AWG) formed a consortium of 11 of its members as well as Albertville, Ala.-based Mitchell Grocery Corp. that placed the $16.13 million winning bid for 43 of the Belle stores.
The deal will lead to some notable changes in the region.
For example, Rouses Markets, one of the AWG members that picked up six stores in coastal Alabama, will be entering a new market. The Thibodaux, La.-based grocer currently operates 38 stores in Louisiana and Mississippi. The six former Belle stores Rouses acquired are undergoing total remodels and are expected to reopen in early 2014.
Additionally, Homeland Stores of Oklahoma, also an AWG member, acquired 11 stores through the deal—10 in Georgia and one in Alabama.
In related news, though not part of the AWG/Belle deal, Sprouts Farmers Market plans to open its first Alabama store in Hoover; an opening date has not been announced.
Phoenix, Ariz.-based Sprouts has more than 160 stores in eight states in the West and Southwest. Alabama would be the company’s easternmost market.
3. Bi-Lo Holdings makes deal to buy three Delhaize banners
Bi-Lo Holdings, owner of Bi-Lo and Winn-Dixie, signed a definitive agreement May 28 to purchase three Delhaize banners—Sweetbay, Harveys and Reid’s—for $265 million in cash. The 165 stores are in Florida, Georgia and South Carolina. Bi-Lo Holdings said in October it planned to retire the Sweetbay and Reid’s banner in favor of Winn-Dixie and Bi-Lo but would largely retain the Harveys banner following the close of the deal, expected to be complete by the first quarter of 2014.
Earlier in the year, Delhaize closed a third of its Central Florida Sweetbay stores. The 33 stores were all shuttered by Feb. 6, leaving the Tampa-based chain with 72 stores. Bi-Lo is buying those 72 stores, plus leases for 10 of the closed stores.
In other Bi-Lo Holdings news, the Jacksonville, Fla.-based company, which purchased Winn-Dixie last year and took the company private, is going public again under the newly-formed Southeastern Grocers LLC. The announcement was made in September. The number of shares and price range have yet to be determined, though reports indicate that the initial public offering could raise as much as $500 million.
4. Bi-Lo sells seven stores in Carolinas to Publix
Bi-Holdings said Sept. 13 that it would sell four of its Bi-Lo banner stores in North Carolina and three in South Carolina to Publix Super Markets, which plans to open its first North Carolina stores in early 2014. In addition to the seven leased stores, the deal also included equipment.
Publix will support these acquired stores as well as its existing and planned stores in the Carolinas through its new Charlotte division.
In other Publix news, the Lakeland, Fla.-based grocer announced in October that it planned to sell its 14-store PIX fuel/convenience business that it began testing in 2001 in order to focus on its core grocery business.
Circle K will purchase 13 locations—11 in Florida and two in Georgia. Max Arnold & Sons LLC of Kentucky will acquire a store in Tennessee.
5. Store shuffle ensues with Piggly Wiggly Carolina’s store sell-off
The day before Bi-Lo Holdings said it would sell seven of its stores in the Carolinas to Publix, the grocery chain became involved in another deal when it was announced that Piggly Wiggly Carolina Co. planned to sell 29 of its stores to two buyers—Bi-Lo Holdings and Harris Teeter Supermarkets.
Bi-Lo purchased 22 stores in South Carolina and Georgia, while Harris Teeter acquired seven South Carolina stores.
“The departure of employees and stores from the Piggly Wiggly team will be acutely felt, but we know that both Harris Teeter and Bi-Lo will benefit from these outstanding folks,” David Schools, president and CEO of Charleston-based Piggly Wiggly Carolina Co., said in September. “We are glad that all store employees affected by this transaction will have the opportunity to work for Harris Teeter and Bi-Lo, and guests will continue to be served by the familiar people who have been the backbone of these stores for years.”
6. AWG’s newest division in Pearl River, La., off to powerful start
Associated Wholesale Grocers opened its newest division in Pearl River, La., in January. It is led by SVP and Gulf Coast Division Manager David Smith, who said in June that the division had 170 member stores. Three months later, in September, that number had increased to 226.
“We’ve tripled our sales volume since we opened our doors,” Smith said Sept. 25. “We continue to have great employees and everything’s going very, very well.”
7. Kroger splits Mid-South Division, corporately continues its strong results
After operating jointly under the Mid-South Division umbrella for more than a decade, 2013 saw Kroger’s Nashville and Louisville divisions separated. The announcement was made in June. Kroger executives said then that opportunities for growth in Kentucky and Tennessee as well as northern Alabama and southern Illinois and Indiana led to the decision.
Rick Going leads the new Nashville division as president and Calvin Kaufman serves as president of the Louisville division.
Corporately, Kroger continued to post positive results in 2013. Its latest report, posted in mid-September for the second quarter of fiscal 2013, showed identical supermarket sales growth, without fuel, of 3.3 percent. It marked the Cincinnati-based company’s 39th consecutive quarter of positive ID sales.
“Kroger’s strong second quarter results have us on target to deliver the earnings per share growth we promised for the year,” David B. Dillon, Kroger’s chairman and CEO, said then. “As we have shown quarter after quarter, our consistent execution of the Customer 1st Strategy deepens customer loyalty, increases sales and creates sustainable shareholder value.”
Other items of interest in the company’s second quarter included:
• Total sales increased 4.6 percent to $22.7 billion in the second quarter compared with $21.7 billion for the same period last year. Total sales, excluding fuel, increased 3.9 percent in the second quarter over the same period last year; and
• Net earnings for the second quarter totaled $317 million. Net earnings for the second quarter last year were $279 million.
8. Flowers Foods returns iconic brands to store shelves after winning bid for majority of Hostess bread business
Nearly a year after Hostess’ much publicized bankruptcy and subsequent shutdown, Thomasville, Ga.-based Flowers Foods returned the iconic Wonder bread and other former Hostess bread brands to shelves in September. The comeback came after, earlier in the year, Flowers purchased the Wonder, Nature’s Price, Merita, Home Pride and Butternut bread brands; 20 bakeries; and approximately 38 depots and other assets for $360 million.
9. Supervalu sells five banners to Cerberus affiliate
Supervalu in January announced that it would sell five of its retail banners—Albertsons, Acme, Jewel-Osco, Shaw’s and Star market—to AB Acquisition LLC, an affiliate of Cerberus Capital Management. The deal closed in March and gave AB Acquisition 877 stores—421 Albertsons, 112 Acmes, 166 Shaw’s and Star Markets, and 178 Jewel-Oscos (including any related Osco and Sav-on in-store pharmacies); the transaction was valued at $3.3 billion consisting of $100 million in cash plus the assumption of approximately $3.2 billion in debt.
Supervalu retained 191 stores under the regional banners it kept—Cub (42 stores), Farm Fresh (43), Shoppers (56), Shop n’ Save (44) and Hornbacher’s (5). It also kept its Save-A-Lot stores, about 1,300, as well as its wholesale distribution business, which in March served about 1,950 stores.
10. Independent grocers in the Southeast generate $21.7 billion in sales annually
The National Grocers Association (NGA), with support from its Grocers Research & Education Foundation, as well as sponsorship from Mondelez International, Nielsen and The Shelby Report, released in April the findings of its “Independent Grocers Impact America” study. A key finding: the independent grocery channel is responsible for about 1 percent of America’s economy.
In the Southeast specifically, independent grocers provide 154,988 direct jobs, along with $4.6 billion in direct wages. Southeastern grocers do $21.7 billion in sales annually and pay approximately $3.9 billion in taxes. In terms of sales, Florida brings in the most with $3.5 billion each year, followed by North Carolina ($2.9 billion) and Georgia ($2.8 billion). Go here to learn more.
Check out the December print edition of The Shelby Report of the Southeast to also read about the leadership changes that have dominated the industry news over the past year.
