Farm Fresh selling 21 stores to Kroger, Food Lion and Harris Teeter

Farm Fresh's parent company Supervalu Inc. announced Wednesday that it plans to sell 21 of its 38 Farm Fresh stores to Kroger, Food Lion and Harris Teeter for about $43 million in cash. The deal means the three grocers are expanding on the Peninsula.

Supervalu is exiting the Farm Fresh business to focus on the growth of its wholesale business, Supervalu President and CEO Mark Gross said.

“This decision was not taken lightly given the impact on our employees and the communities we serve, but we strongly believe this decision is in the best long-term financial and strategic interest of our business," Gross said.

Eight Farm Fresh stores are being sold to Kroger, 10 stores are being sold to Harris Teeter and three stores are being sold to Food Lion, Supervalu said. The transactions are expected to close in May and Farm Fresh is working with a third party to liquidate the inventory at the stores, Supervalu said.

Minneapolis-based Supervalu said the company also is exploring sales of the remaining 17 Farm Fresh stores to current and prospective wholesale customers and even some Farm Fresh employees.

Kroger Mid-Atlantic announced Wednesday buying eight Farm Fresh stores in Hampton Roads, including the stores at 6500-C George Washington Memorial Highway in Grafton, at 2190 Coliseum Drive in Hampton, at 1282 Smithfield Plaza in Smithfield and at 7254 George Washington Highway in Gloucester.

Food Lion announced Wednesday it is buying the Farm Fresh stores at 608 Mercury Blvd. in Phoebus, 1615 General Booth Blvd. in Virginia Beach and 683 South Hughes Blvd. in Elizabeth City, N.C. North Carolina- based Food Lion said the acquired locations will remain open as Farm Fresh stores until the deal is complete in May.

Harris Teeter, which is a wholly owned subsidiary of The Kroger Co., is buying the Farm Fresh stores at 227 Fox Hill Road in Hampton and 4511 John Tyler Highway in the Williamsburg area. Harris Teeter said it plans to finalize remodeling and re-opening plans while the stores are closed.

In Virginia Beach, Harris Teeter is acquiring the stores at 2110 West Great Neck Shopping Center, 521 Laskin Road, 1069 Independence Blvd. and 2129 General Booth Blvd. Harris Teeter is buying the locations at 179 West Ocean View Ave. and 730 West 21st St. in Norfolk, 1400 Kempsville Road in Chesapeake, and the store at 3575 Shoulder Hill Bridge Road in Suffolk.

The acquisition means Cincinnati-based Kroger would operate 18 stores in Hampton Roads, according to a news release. Kroger plans to invest more than $30 million to renovate the stores and transform them to Kroger stores. The reopening dates haven’t been determined.

Kroger operates 10 stores currently in the region and is new to Smithfield and Gloucester.

Kroger is buying South Hampton Roads stores at 1401 North Main St. in Suffolk, 309 South Battlefield Blvd. and 1464 Mount Pleasant Road in Chesapeake, and 230 East Little Creek Road in Norfolk.

The new Kroger stores will include four fuel centers and eight pharmacies, according to the news release. During the construction phase, all eight pharmacies will remain open in some capacity.

Farm Fresh is working with the store buyers to help transition employees, and will offer eligible employees severance, said Anne Dament, Supervalu executive vice president for retail.

Farm Fresh, which has been headquartered in Virginia Beach, was founded more than 60 years ago in 1957 and employs about 3,300 workers.

The remaining Farm Fresh stores include 353 Chatham Drive in Newport News, 30 Towne Center Way in Hampton, 460 Wythe Creek Road in Poquoson and 115 Norge Lane in James City County. Customers of Farm Fresh pharmacies for the unsold stores will receive information on the transfer of their files to other nearby pharmacies, the company said. Those stores will remain open as Farm Fresh seeks buyers, according to a company spokesman.

Farm Fresh closed stores at 455 Merrimac Trail near Williamsburg and in Newport News near Kiln Creek last year. A shareholder of Farm Fresh’s parent company has been pressuring the company to sell off its retail business.

Peninsula grocery store competition has increased with German discount grocers Aldi and Lidl recently entering the market and Kroger and Walmart seeing success with online grocery ordering for pickup. Farm Fresh ranked No. 3 for grocery market share in Hampton Roads after No. 1 Food Lion and No. 2 Walmart in Food World's annual market study last year.

Bozick can be reached by phone at 757-247-4741. Sign up for a free weekday business news email at TidewaterBiz.com or follow @TidewaterBiz.

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