KANSAS CITY, Kan. — Associated Wholesale Grocers here last week said it would begin supplying the Texas Division of Albertsons LLC and that four of its distribution customers would acquire 23 Albertsons stores in Oklahoma.
“This will add buying power, and it should add cash flow to the co-op,” said Jeff Reasor, chairman, president and chief executive officer of Tahlequah, Okla.-based Reasor's, one of the independents that is acquiring an Oklahoma Albertsons location. Reasor serves on the board of directors of AWG, a $5 billion cooperative wholesaler.
AWG also is buying the 1.1 million-square-foot distribution center in Fort Worth, Texas, that Albertsons LLC has used to supply its Texas division. That will allow the wholesaler to more economically serve its customers in parts of Texas, including Minyard's, the Coppell, Texas-based chain that AWG is scheduled to begin supplying later this year. Previous plans had called for Minyard's to be supplied from AWG's new Oklahoma City depot, according to Reasor.
Terms of the transactions were not disclosed. The supply pact with Albertsons, which entailed Albertsons joining the co-op, is a five-year agreement.
Albertsons' Texas division currently encompasses 141 stores in Texas, Oklahoma and Louisiana, including the 23 stores to be sold and three others that will be closed, a spokeswoman for Albertsons LLC told SN. The sales and store closures will eliminate the Albertsons banner from Oklahoma.
“Oklahoma was a market where we didn't have great market share,” Robert Miller, chief executive officer, Albertsons LLC, told SN last week. “This was an opportunity to sell most of those stores to operators who really do well in that market. Tied with that, we were able to negotiate a deal with AWG to sell that warehouse. They have a couple of customers that can add volume in that warehouse, and that is really going to lower our costs.”
Boise, Idaho-based Albertsons LLC includes the Albertsons stores not acquired by Supervalu last year. It will continue to operate 351 locations after the sale.
In addition to Reasor's, the other independents that are acquiring Albertsons stores in Oklahoma are RPCS Inc., Springfield, Mo., which is buying nine Albertsons; Williams Discount Foods, Oklahoma City, which is buying six of the stores; and Homeland, a subsidiary of AWG, which is buying the other seven locations. All of the operators are planning to convert the acquired stores to their own banners in the coming weeks.
The sales of the Oklahoma stores and the outsourcing of distribution in Texas come on the heels of Albertsons LLC's acquisition of 10 Raley's stores in New Mexico. Miller said his company is looking at additional acquisition opportunities. He said he looked at the A&P Sav-A-Center stores for sale in New Orleans and decided not to buy them.
“We want to run good stores that are successful and generate cash flow, and we've really got to the point now where almost all of our stores are doing that,” he said.
