Lucky's Market Files for Chapter 11 Bankruptcy
Along with closing 32 of its 39 stores, Lucky's Market revealed that it has filed for Chapter 11 bankruptcy protection and signed an asset purchase agreement with deep discounter Aldi for five leased store properties and the purchase of one owned property.
Niwot, Colo.-based Lucky's noted that the agreement is subject to court approval and an overbidding process. The company has retained New York-based M&A investment banker PJ Solomon to assist it in the sales of these and other assets. At presstime, Lucky's hadn't revealed which store properties were covered by the agreement.
According to PJ Solomon, Lucky's "has agreed to sell various stores to Aldi and Publix, who will be stalking horses in the Lucky’s Chapter 11 filing," although Lucky's made no mention of Lakeland, Fla.-based Publix Super Markets, which operates more than 1,200 stores across seven southeastern states and is No. 5 on Progressive Grocer’s 2019 Super 50 list of the top grocers in the United States, in its own press release.
Citing Publix spokeswoman Maria Brous, however, the Tampa Bay Business Journal reported that the grocer would purchase the leases of five Lucky's stores: Clermont, Naples, Neptune Beach, Orlando and Ormond Beach.
When contacted by PG via email, Aldi sent a statement from Dan Gavin, VP national real estate, Aldi U.S.: "We can confirm Aldi is acquiring several Lucky’s Market locations in Florida. Among other innovative real estate strategies, site acquisitions are an important part of our growth efforts. We are pleased to continue to expand our presence across the country. As one of the fastest-growing retailers in the U.S., we are on track to become the third-largest U.S. grocery retailer by store count by 2022. We will share more information as it’s available."
Aldi made no mention of which Florida locations it was purchasing, but at least one local report cited court filings indicating that the retailer was buying the Gainesville store.
With its global headquarters in Germany, Aldi operates more than 1,900 U.S. stores in 35 states. Batavia, Ill.-based Aldi U.S. is No. 9 on PG’s 2019 Super 50 list.
Just last week, New York metro area grocer Fairway Market filed for Chapter 11 and hired PJ Solomon to help it sell off its 14 stores, including five Manhattan locations to Springfield, N.J.-based ShopRite operator Village Super Markets.
Lucky's massive retrenchment comes in the wake of the Kroger Co.'s divestment in the grocer. Cincinnati-based Kroger employs nearly half a million associates who serve 9 million-plus customers daily through a seamless digital shopping experience and 2,769 retail food stores under a variety of banner names. The company is No. 2 on PG's 2019 Super 50 list.
For the time being, though, it's business as usual -- more or less -- at Lucky's. "At the time of filing, the company had sufficient cash on hand and an agreement for the consensual use of cash collateral," noted the grocer. "As such, the company should have the continued ability to meet its financial obligations, including those to its employees, as well as to vendors for the continued supply of product to its operating locations."