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Supervalu closes sale of block of Farm Fresh stores

Divestiture continues efforts to refocus business on food wholesale

Supervalu Inc. has wrapped up its sale of 21 Farm Fresh supermarkets to Harris Teeter, Kroger Co.’s mid-Atlantic division and Food Lion.

Minneapolis-based Supervalu had announced plans to divest the Farm Fresh chain, which had 38 stores overall in Virginia and North Carolina, in March.

Supervalu said late Thursday that it’s working on selling the remaining Farm Fresh stores to current and prospective wholesale customers. The company had retained consulting firm Food Partners LLC as an adviser for the sale of Farm Fresh locations.

Of the 21 stores sold for $43 million, 10 were acquired by Harris Teeter (including six in-store pharmacies and three fuel centers), eight by Kroger’s mid-Atlantic division (including eight in-store pharmacies and four fuel centers) and three by Food Lion (including three in-store pharmacies). In addition, prescription files from 14 Farm Fresh pharmacies not included in those transactions were sold, including files from 10 pharmacies to Rite Aid and four to CVS Pharmacy.

“I appreciate the team’s timely work completing these transactions,” Supervalu President and Chief Executive Officer Mark Gross said in a statement. “Every day, we’re working to continue the rapid transformation of our business, and the exit from our Farm Fresh banner is another step forward in becoming the grocery supplier of choice for retailers across the country.”

Last week, Supervalu unveiled plans to divest the Shop ‘n Save grocery chain, including stores in St. Louis and the Shop ‘n Save East stores in West Virginia, Maryland, Pennsylvania and Virginia, which had been acquired from Food Lion.

The sell-off of Farm Fresh and Shop ‘n Save will leave Supervalu with three supermarket chains: Cub Foods, Hornbacher’s and Shoppers. The company said that as of Feb. 24 it had 114 traditional retail grocery stores under three banners.

“Exiting from our Farm Fresh banner and our announcement to pursue the sale of two others [Shop ‘n Save] demonstrates our efforts to transform this company and make Supervalu an increasingly wholesale-oriented company,” Gross said in a conference call last week on the company’s fiscal 2018 results.

Supervalu also has agreed to sell and lease back eight of its owned distribution centers to an undisclosed buyer in a deal valued at $483 million.

Food wholesale accounts for the bulk of Supervalu’s business, representing 78% of total sales in fiscal 2018, up from about 44% only two years ago. Overall, the company serves a network of 3,437 stores, including 3,323 stores operated by its food distribution customers.

Other moves by the company to refocus its business on distribution include the sale of Save-A-Lot for $1.3 billion in 2016 and the acquisitions of Unified Grocers and Associated Grocers of Florida in 2017.

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