Supervalu Unloads 16 Connecticut Shaw’s to Wakefern, Stop & Shop

Making good on a pledge made by CEO Craig Herkert late last year to divest nonstrategic assets in select geographic markets, Supervalu has sold 16 Shaw’s supermarkets in Connecticut to two entrenched Northeast corridor retailers as it continues to seek buyers for two additional locations in the state.

Wakefern Food Corp., the nation’s largest retailer-owned co-op, picked up 11 Shaw’s locations on behalf of individual member owners, while Ahold’s Stop & Shop division acquired five others. The transactions are expected to close in the spring and include inventory, equipment and lease agreements. Quincy, Mass.-based Stop & Shop will pick up Shaw’s locations in Darien, East Hampton, New Fairfield, Newington and Vernon. The 11 Shaw’s locations to be acquired by Keasbey, N.J.-based Wakefern are in Canton, Clinton, East Hartford, Enfield, Fairfield, Hamden, Southbury, Stratford, Wallingford, West Hartford and Willimantic, according to Shaw’s Web site.

Once the acquisition is complete, 10 of the Wakefern-acquired stores will be operated under its flagship ShopRite banner, and one location will reopen as a PriceRite.

“The acquisition of these stores represents an exceptional growth opportunity for Wakefern and its members,” said Joseph Colalillo, Wakefern’s chairman and CEO. With 13 existing ShopRite stores and eight Price Rites throughout Connecticut, Colalillo noted, “The Connecticut market has been very supportive of ShopRite and PriceRite over the years, and the addition of these stores allows us to expand our presence in the market.”

In addition to a broad array of groceries and fresh produce, the new slate of Connecticut ShopRite stores will include such services as in-store bakeries, fresh meats and seafood, full-service floral departments, and a broad selection of natural and organic products, according to Colalillo. The stores may also offer a wide array of prepared foods, including salads, freshly prepared hot foods, fresh oven-baked pizza, sushi, a selection of ethnic specialties for dining in or taking out, and a gourmet coffee. Wakefern’s newly purchased stores will be closed for renovation and remerchandising, and most will begin to reopen throughout the spring and summer of 2010. Pharmacy service will not be interrupted during the transition.

Colalillo said that the retail co-op is pumped about the prospects of “increasing our presence in Connecticut. Each one of our members who live and work in the area [is] excited to bring the high quality, low prices, great service and … sense of family and community spirit that the public has come to expect.”

Stop & Shop said it intends to interview all current Shaw’ associates at its five soon-to-be-acquired stores and expects to offer employment to most of them.

Pete Van Helden, Supervalu’s EVP of retail operations, said, “While these decisions are always difficult, given the impact on associates and customers, they ultimately allow us to operate more efficiently and effectively within a highly competitive retail environment.”

Shaw’s continues to operate 176 stores in five New England states, as well as its sister division, Boston-based Star Market.

Supervalu acquired Shaw’s in 2006 as part of the Albertsons acquisition, which, while giving Supervalu a coast-to-coast retail presence with 2,500 stores, also significantly increased its debt load. After assuming the chief executive reigns from Minneapolis-based Supervalu’s longtime former president and CEO, Jeff Noddle, in mid-2009, Herkert vowed to shareholders that his overhauled management team would do “what we must to … improve our near-term performance and [set] the foundation from which to execute. We will emerge from this challenging environment more agile and more competitive.” This improvement strategy includes divestures of supermarket divisions, in whole or part, on a market-by-market basis, the proceeds of which will be used to pay down the company’s debt.

The sale of Shaw’s Connecticut stores follows Supervalu’s sale of 36 Albertsons stores in Utah.
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