Spartan says 20 Food Towns to be sold in 6 weeks

6/26/2003

Executives of Spartan Stores Inc., the Grand Rapids, Mich., firm that owns Food Town, told stock analysts in a conference call yesterday that they expect the deals to be completed before the midway point of its second fiscal quarter, which ends Sept. 13.

Potential buyers have expressed interest in the other six stores, executives said. Neither the 20 stores sold nor the six unclaimed were identified, nor were any of the buyers.

The Blade has identified buyers for eight sites plus one Food Town closed two months ago. Kroger began doing business under its sign yesterday in three of the 20 stores.

Spartan's talk with analysts came a day after the company released its annual financial report that showed the firm lost $122 million for the fiscal year ending March 29. Much of the loss was attributed to tough competition and Food Town closings. The company had sales of $2.1 billion for the year from its large wholesale grocery operation and its supermarkets.

The company's stock, trading for the first time yesterday since the financial report was released, closed 10 cents higher at $2.74 a share on Nasdaq.

In response to an analyst's question, executives said Spartan owns 19 of the 26 Food Town sites, including 17 of the 20 for which sales are in place. Those sales are expected to generate a gain of $25 million to $30 million to help pay off long-term debt, Spartan said.

Company officials told analysts they have high hopes for the Pharm discount drugstore chain bought with Food Town three years ago, predicting that sales at those stores will jump 10 percent in its first fiscal quarter from the period a year earlier. That quarter ended last week.

Spartan, facing intense competition in the Toledo market, closed 13 Food Towns in April and said at about that time it would sell or close the remaining 26 supermarkets in northwest Ohio and southeast Michigan. The firm said it might convert some to Pharm stores. Just prior to those announcements, an industry report showed Food Town was metro Toledo's second largest grocer, with 22 percent of the market.

Even as a Spartan spokesman said no details would be provided about the sales until the deals were finalized, Kroger opened for business at 7 a.m. yesterday at former Food Town sites at 1415 Byrne Rd. in the Southland Shopping Center and at 5201 Suder Ave., both in Toledo, and at 1315 Oak Harbor Rd. in Fremont.

Kroger, a spokesman told The Blade, brought staff from its nearby stores to restock and make over the stores after it took possession of the Food Towns last week. Existing Kroger workers also staffed the stores yesterday, but the company spokesman said former Food Town workers have been interviewed and some may be hired.

Toledo commercial real estate agents said the buyers of the Food Town stores most likely would be existing grocery chains. Kroger has expressed interest in more Food Town stores, and Giant Eagle and other chains are interested in some, sources familiar with the transactions have told The Blade.

Workers at Food Town stores still owned by Spartan have been given no information about buyers, said Deb Collins, who represents the grocery workers for Local 911 of the United Food and Commercial Workers.

“Everybody knows what's going to happen,” she said. “They just need a little closure.”