Harris Teeter, Lowes to Swap Store Locations
The operating subsidiary of Harris Teeter Supermarkets Inc., Harris Teeter Inc., and Lowe’s Food Stores Inc. have entered into a purchase and sale agreement that will result in Harris Teeter’s acquiring 10 Lowes Foods store locations in the central Carolinas region and Lowes Foods acquiring six Harris Teeter store locations in western North Carolina.
The Lowes Foods stores that Matthews, N.C.-based Harris Teeter is acquiring are located in Charlotte, Cornelius, Davidson, Cornelius, Huntersville, Mint Hill, Weddington and Wesley Chapel, N.C., and Fort Mill, S.C., while the Harris Teeter locations that Lowes Foods is purchasing are in Asheville, Gastonia, Hickory, Morganton and Shelby, N.C. Harris Teeter will also pay Winston-Salem, N.C.-based Lowes Foods $26.5 million. The transaction is expected to wrap up during Harris Teeter’s third quarter of fiscal 2012, which ends July 1.
Harris Teeter plans to temporarily close the acquired stores for five to 16 weeks for remodeling, stocking and employee training. Three of the acquired stores are expected to be converted to a new format offering an international variety of wine, beer, specialty foods and other selected merchandise, and one acquired store is expected to be subleased. In connection with the transaction, the grocer expects to sustain pre-tax non-cash impairment losses and other related expenses of between $23 million and $26 million during the second half of fiscal 2012. The after-tax impact is expected to range between $14 million, or 29 cents per diluted share and $16 million, or 32 cents per diluted share, with the majority of the charges expected to be logged in the company’s third fiscal quarter.
Lowes Foods will reopen its six acquired stores under the Lowes Foods banner after a brief closing period for remodeling, stocking and associate training.
“This transaction aligns with our strategic plans to replace rural store locations with more urban locations with higher density of our target demographic groups,” explained Thomas W. Dickson, chairman and CEO of Harris Teeter, which operates stores in eight Southeastern and Mid-Atlantic states, as well as the District of Columbia. “It provides us with the opportunity to explore in selected locations an innovative format that we think our customers will find exciting.”