Company Press Release
SUPERVALU INC. announced it has entered into three separate definitive agreements to sell 21 of its 38 Farm Fresh Food & Pharmacy (“Farm Fresh”) stores for approximately $43 million in cash to three different retailers: Harris Teeter, Kroger Mid-Atlantic Division, and Food Lion. SUPERVALU is also continuing discussions and exploring potential transactions to sell the remaining Farm Fresh stores to current and prospective wholesale customers and certain Farm Fresh employees.
“Over the past two years, we’ve been working diligently and rapidly to transform our business to become the wholesale supplier of choice for grocery retailers across the United States,” said Mark Gross, SUPERVALU’s President and CEO. “In 2016, we sold Save-A-Lot and its network of approximately 1,350 retail locations. Last year, we acquired Unified Grocers and Associated Grocers of Florida, which when combined with substantial organic growth, added more than $5 billion in run rate sales to bring our core wholesale business to nearly $13 billion. Exiting the Farm Fresh banner will enable us to allocate greater resources and energy toward the strategic growth of our wholesale business. We also continue to aggressively pursue other important initiatives, including the monetization of real estate through sale leaseback transactions and cost reduction across the company. We are confident our efforts are driving growth and enhancing our competitive position.”
Gross continued, “This decision was not taken lightly given the impact on our employees and the communities we serve, but we strongly believe this decision is in the best long-term financial and strategic interest of our business. Our leadership team and board of directors remain committed to taking proactive steps to transform our business and drive stockholder value.”
“We are thankful for the tremendous service our employees have delivered at Farm Fresh through the years, and are grateful for the opportunities we’ve had to share in the lives and special events of our customers and employees across the Hampton Roads, Richmond, Williamsburg, and Elizabeth City communities,” said Anne Dament, Executive Vice President, Retail, Marketing and Private Brands. “We are working with the buyers to ensure a smooth transition and we expect them to offer positions to many Farm Fresh employees. In addition, we plan to offer eligible employees severance and other job transition support.”
In summary, the agreements provide for:
• Ten stores being sold to Harris Teeter, including six in-store pharmacies and three fuel centers
• Eight stores being sold to Kroger Mid-Atlantic Division, including eight in-store pharmacies and four fuel centers
• Three stores being sold to Food Lion, including three in-store pharmacies
The transactions, which were unanimously approved by SUPERVALU’s board of directors, are currently expected to close in May 2018, subject to customary closing conditions. SUPERVALU is also working with a third party to liquidate the inventory at these Farm Fresh stores.
With regards to Farm Fresh pharmacies not included in these three sale transactions, SUPERVALU has entered into agreements to transfer pharmacy prescription files to other pharmacies in the area. Prescription files from ten pharmacies will be transferred to Rite Aid and four to CVS Pharmacy. Customers of these Farm Fresh pharmacies will receive detailed information on the transfer of their pharmacy files by mail within the next seven to ten days, and information will also be available at each pharmacy.
A complete list of stores to be sold under the agreements, along with a list of the impacted pharmacies and correlating pharmacies where prescription files will be transferred, is included in the addendum to this press release.
Founded in 1957, Farm Fresh has served Virginia and North Carolina for 60 years, and today employs approximately 3,300 associates.
The Food Partners, LLC advised SUPERVALU on the transactions, and is advising SUPERVALU on its continued exploration of the sale of additional Farm Fresh stores.
About SUPERVALU INC.
(The following information does not include Associated Grocers of Florida which became part of SUPERVALU on December 8, 2017)
SUPERVALU INC. is one of the largest grocery wholesalers and retailers in the U.S. with annual sales of approximately $16 billion. SUPERVALU serves customers across the United States through a network of 3,324 stores composed of 3,111 wholesale primary stores operated by customers serviced by SUPERVALU’s food distribution business and 213 traditional retail grocery stores operated under five retail banners in six geographic regions (store counts as of December 2, 2017). Headquartered in Minnesota, SUPERVALU has approximately 31,000 employees. For more information about SUPERVALU visit www.supervalu.com.
Forward Looking Statements
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
Except for the historical and factual information, the matters set forth in this news release, particularly those pertaining to the expected completion of the sales of Farm Fresh stores (including the timing thereof), the ability to consummate the sales and SUPERVALU’s expectations, guidance, or future operating results, and other statements identified by words such as “estimates” “expects,” “projects,” “plans,” “intends,” “outlook” and similar expressions are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the ability to satisfy the closing conditions and close the proposed sales on a timely basis or at all, the possibility that modifications to the terms of the transactions may be required, business disruption, ability to effectively retain key employees and ability to effectively manage organization changes during the pendency of or following the transactions, and other risk factors relating to the business or industry as detailed from time to time in SUPERVALU’s reports filed with the SEC. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. For more information, see the risk factors described in SUPERVALU’S Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the SEC. Unless legally required, SUPERVALU undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
For SUPERVALU Inquiries:
Investors: Steve Bloomquist, 952-828-4144, steve.j.bloomquist@supervalu.com
or
Media: Jeff Swanson, 952-903-1645, jeffrey.s.swanson@supervalu.com
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