The growing price war between grocery stores, the entry of Amazon into the competition arena after the purchase of Whole Foods and the arrival of the new discount grocery chain Lidl, have claimed new victims. Southeastern Grocers started a bankruptcy process and will close 94 stores in the southeastern US, while another company on the west coast, SUPERVALU, decided to sell 21 of its Farm Fresh stores.
Southeastern Grocers LLC is the operator of the supermarket chains Winn-Dixie, Bi-Lo, Fresco y Más and Harvey’s. The company said in a statement that it decided to opt for a restructuring through a Chapter 11 bankruptcy process to reduce its debts and secure the future of the company.
Anthony Hucker, president and CEO of SEG, said the restructuring agreement “is an important step in Southeastern Grocers’ transformation to put our company in the best position to succeed in the extremely competitive retail market in which we do business.”
Hucker added that “with the strong support of our leadership team, we will work through this process as quickly and efficiently as possible. We are excited to emerge with the optimal store footprint and greater financial flexibility to invest in Southeastern Grocers’ growth.”
The restructuring will lower overall debt levels by more than $500 million and includes 94 store closures in South Carolina, Alabama, Georgia, North Carolina, Mississippi, Louisiana and Florida, where 35 supermarkets will be closed.
Southeastern Grocers will continue to operate its remaining 582 stores during this bankruptcy process that will be filed in the Delaware Bankruptcy Court at the end of March.
“We expect our financial health and free cash flow to improve in the newly reorganized company, and although the restructuring contemplates certain store closings, SEG is committed to ensuring that all associates continue to be treated with the utmost dignity, respect and compassion. We will continue every day to provide our associates with a great place to work and our customers with a store experience they can count on,” Hucker said.
SUPERVALU sells 31 stores
Wholesale and retail distributor SUPERVALU, based in Minneapolis, began the process of selling 21 of its 38 Farm Fresh supermarkets to three different supermarket chains, for a total value of $43 million.
“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,”said Mark Gross, president and CEO of SUPERVALU.
According to the sale agreement, 10 Farm Fresh stores will pass to Harris Teeter; eight stores were purchased by Kroger’s Mid-Atlantic Division; three others were acquired by Food Lion. The transactions must be completed in May, according to a press release.
Founded in 1957, Farm Fresh has served Virginia and North Carolina for 60 years, and today employs approximately 3,300 associates.