Marsh Supermarkets is seeking a white knight.
The struggling Indianapolis retailer this week let state officials in Indiana know that it could close up to 16 additional stores if it can’t find a buyer or business partner within 60 days. The potential closures would come in addition to previously announced shuttering of 19 stores scheduled this month.
Marsh, which operated 120 stores when acquired from its founding family by Sun Capital Partners in 2006, will operate just 45 stores following the closures this month, and 29 if it follows through on the 16 additional closures referred to in the letter (below) to the Indiana Department of Workforce Development dated Monday.
The letter informed the agency of conditional notice requirements under the federal Worker Adjustment Retaining and Notification (WARN) act.
In the letter, Marsh VP of Legal Affairs Ben Habegger said Marsh “has recently experienced a period of unexpected difficulties and increased competition resulting in poor sales performance.”
It said the company was currently seeking a buyer or business partner that would allow the company to continue operations. Nearly 1,500 workers would be affected by the closures.
As reported last month, Marsh has already made “drastic” cuts in its headquarters staff to help fight off financial challenges and was being asked by at least some supplier to pay cash-on-delivery for supplies. A former executive of the company said it was likely that Sun had established a “pecking order” of stores to be closed as it attempts to derive further income from the chain.
Local reports said the company stopped rent payments at some locations and has engaged the New York investment bank Peter J. Solomon Co. to help it seek strategic alternatives. Solomon was also working with troubled Midwest distributor Central Grocers, which filed for protection under Chapter 11 of the U.S. Bankruptcy code last week.
Sources said some Midwest retailers are likely caught up in pricing pressures from Walmart, Kroger and Aldi in addition to an expansion of retail square footage by competitors and by the growing influence of internet shopping options. Walmart earlier this year extended its multi-billion dollar price investment scheme to certain Midwest markets.
The list of 16 potentially closing stores includes six in Indianapolis and two each in Muncie and Zionsville, Ind., as well as single stores in Brownsville, Carmel, Greenwood, Kokomo and Marion, Ind. The list includes one of Marsh’s newest stores on West Michigan St. in downtown Indianapolis.