Kroger to exit Raleigh-Durham market
Harris Teeter to acquire eight locations
Kroger has confirmed that it will exit the Raleigh-Durham, N.C., market on or about Aug. 14, by closing and selling its 14 locations.
“After a thorough evaluation of the market for a significant time period, we have decided to close our stores in the highly competitive Raleigh-Durham market,” said Jerry Clontz, president of the Mid-Atlantic division of Kroger. “While we have had some success, we have not been able to grow our business the way we would like in this market.
Added Clontz, “The retail environment is challenging and changing in Raleigh-Durham. Many retail analysts say the Raleigh-Durham market is over-stored.”
The closures will impact about 1,500 employees, more than half of which are part-time associates.
“We’ve been a part of the Raleigh-Durham market since 1989, and our associates have provided customers with top-notch service,” said Clontz. “Helping them through this transition is our number one priority.
“We’re making every effort to assist our associates in finding employment,” said Clontz. “We will offer job fairs and job placement services to associates. Our associates also have access to our employee assistance programs to help them manage through this process.”
Food Lion has snapped up one store and Crunch Fitness will also move into one location in Raleigh. Harris Teeter has announced that it will acquire eight stores in the Raleigh-Durham area. Clontz said Kroger is in discussions and exploring potential options for the remaining locations.
Harris Teeter expects the transaction to be completed in August and intends to finalize its remodel and re-opening plans while the stores are closed. Pharmacies at five of the purchased stores will remain open throughout the transition.
“Kroger has a long tradition of operating in this area, as does Harris Teeter” said Danna Robinson, communication manager for Harris Teeter. “Our valued associates have proudly served these Raleigh-Durham communities for decades, so these store locations are especially attractive to us. We plan to invest in remodeling a number of these locations to better serve our shoppers in this growing and vibrant market.”
Kroger Mid-Atlantic worked with The Food Partners, a Washington, D.C.-based, grocery industry focused investment banking firm, as a strategic adviser for the divestiture of these stores.
Kroger Mid-Atlantic operates 108 additional stores in Virginia, West Virginia, Tennessee, Kentucky and Ohio.
Fred’s hires firm to court pharmacy buyers
Memphis-based company Fred’s has hired PJ Solomon & Co. to assess the value of its pharmacy script portfolio and engage with potential buyers, the company announced alongside its Q1 2018 results Thursday.
“That process is well underway and we will provide updates as appropriate,” Fred’s interim CEO Joe Anto told analysts on a call Thursday. “Additionally, we are engaged in sale processes for various properties within our real estate portfolio and expect to have multiple transactions closed over the course of this fiscal year.”
These strategic transactions — which follow the company’s sale of its specialty pharmacy business, EntrustRx, to a CVS Health subsidiary earlier this year — are efforts the company has undertaken as part of what Anto called a “reset” after it posted a net loss of $139.3 million for fiscal year 2017. The company’s two main goals, Anto said, are eliminating its debt balance — largely accrued in the scrapped plan to acquire Rite Aid stores that would have been divested had Walgreens successfully purchased Rite Aid last year — and generating positive EBITDA and free cashflow by Q4 of this fiscal year.
For the quarter, Fred’s posted a 5.1% decline in net sales compared with last year’s Q1, bringing in $437.1 million. Comparable-store sales dipped 3.9% for the quarter — an improvement over the 4.2% decline comps saw in Q1 2017. The company’s gross profit dropped to $11.6 million, compared with $128.6 million a year ago, and gross margin as a percent of sales decreased 220 basis points to 25.5%, compared with 27.7% in Q1 2017. Fred’s posted a net loss of $19.9 million, which was an improvement on the net loss of $37.8 million it posted in the year-ago period.
Fred’s said that eating into its gross profit were direct and indirect remuneration fee increases for 2018, as well as prescription rebates from 2017 that did not recur this year and a shift in sales mix.
Fred’s saw selling, general and administrative expenses comprise 29.7% of sales — down 560 basis points from the 35.3% of sales it made up in the year-ago period. Anto noted that this reflects, in part, a decrease in the headcount at its headquarters, which currently totals roughly 274 people, compared with 440 people at the same time last year. Among those no longer in the headcount is former CEO Mike Bloom, who departed the company in April. Alongside decreasing its expenses, Anto noted that the company also has made strides in paying down its debt, with its asset-backed loan borrowings standing at $135 million as of June 12 — down from $162 million at the end of Q1 on May 5. The company’s available liquidity currently stands at $60 million.
“We expect our ABL balance to continue to decrease over the coming weeks, as we collect all remaining receivables associated with the specialty pharmacy business,” he said. “We continue to explore other strategic transactions and expect to generate additional cash proceeds which should meaningfully reduce our debt balance.”
Walmart intros Winemakers Selection collection
Walmart is tackling a whole new game.
The retailer recently announced the launch of its new Winemakers Selection collection, which includes everything from a Grenache and Sangiovese to Cabernet and Sauvignon.
Found exclusively on the shelves of 1,100 Walmart stores, the collection features wine from around the world, easy to read labels so consumers can find exactly what it is they are looking for and a price range of $10 to $16 per bottle.
Featured wines in the collection include:
- Cabernet Sauvignon, which is cultivated from Paso Robles in the heart of California’s wine region, features flavors of blackberries, cherries and plums; is best paired with red meats, stews and casseroles and carries an $11.96 price;
- Giovanni Da Verrazzano, which is sourced from Italy’s Tuscany region, contains a dry and fruity flavor, is best paired with roasted. Meats, game and rich tomato-based dishes, and also is valued at $11.96 per bottle;
- Chianti Reserva, which can be paired with red meat dishes, contains tannic, oak-aged, warm fresh and earthy flavors, stems from Italy’s oldest vineyard region and can be purchased for $15.96;
- Grenache Minervois Languedoc, which is sourced from the southern banks of Rhone River in the South of France, features fruity hints of smoke, pairs best with red meat dishes and is valued at $10.96 per bottle;
- Grenache Rose, which is produced in the Western Languedoc region of France, has fruity notes, is valued at $10.96 per bottle and pairs best with seafood dishes;
- Sangiovese Sanguis Jovis, which is cultivated from Tuscany, featured fruity aromas, pairs best with red meat dishes and is valued at $10.96 per bottle;
- Italian Red Blend, which comes from the Puglia, Abruzzo, Sicily and Veneto region in Italy, features notes of dark fruit, figs and coffee, is best paired with red meat dishes and is valued at $10.96;
- Sparkling Rose, which hails from France, contains a blend of fruit and acidity, pairs best with seafood dishes and is valued at $14.96;
- Montage Noire Francais Cabernet Franc, which is sourced from the Black Mountains in the South of France, contains a fruity flavor, paired best with roasted pork, chicken and goat cheese and is valued at $10.96; and
- Syrah Languedoc, which comes from Languedoc in France, contains a traditional red flavor, is best paired with red meat dishes and clocks in $10.96 per bottle.
Further information on the collection can be found on the retailer’s website.