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UNFI Makes Deals for 13 Shoppers Stores; 4 More to Close

Lidl, Compare Foods and McKay’s are buyers as lengthy wind down continues, sources say
Photograph courtesy of Shopper's Market

In a move bringing a small measure of resolution to a long-standing mystery of food retailing in the Baltimore and Washington, D.C., area, United Natural Foods Inc. (UNFI) is selling 13 of its remaining 43 Shoppers Food Stores to three separate buyers.

The distributor, which has been trying to wind down the retail holdings it acquired as part of its Supervalu deal for more than a year, also said four Shoppers stores would be closing by the end of January.

The stores are to be sold in three separate deals expected to close between mid-December and February. UNFI did not identify the buyers, although sources told WGB that an affiliate of the Hispanic-focused chain Compare Foods was acquiring five stores, and two more stores were going to McKay’s Foods, a family-run independent operator based in Hollywood, Md. Lidl is the third buyer, according to United Food and Commercial Workers (UFCW) Local 400, and is acquiring six sites.

Two of the buyers have made separate deals with UNFI to serve as the primary supplier of their acquired Shoppers locations under different banners. Officials of Compare, McKay’s and Lidl were not immediately available for comment. 

The closing units are in Manassas and Alexandria, Va., and Baltimore (on Liberty Road) and Severn, Md. Three units are closing due to lease expirations; a fourth lease is being canceled pursuant to an agreement with its landlord. UNFI said it will continue to operate its remaining 26 Shoppers stores while marketing them for sale.

Founded in 1929 and based in Lanham, Md., Shoppers was once a prominent player in the Baltimore and Washington, D.C., area, known for warehouse-style stores and specialty items such as store-made doughnuts. But the chain had been slowly winding down for some time as its previous owner, Supervalu, prepped itself for a sale, with several stores during that period sold to local rival Giant Food. Upon acquiring Supervalu last summer, UNFI said it would exit all of Supervalu’s retail operations. Earlier this year, UNFI closed pharmacies at 30 Shoppers stores, and it sold the prescriptions and inventories to CVS and Walgreens.

The slow-evolving process was at the core of considerable anxiety among workers, who staged demonstrations at its stores earlier this year.

United Food and Commercial Workers Local 400, which represents workers at three stores to be sold and one of the closing units, said in a statement that it was “shocked” to learn the deal was completed without its input.

“Our union will do whatever it takes to ensure our members land on their feet. We will fight to protect the rights of Shoppers workers under the law and our union contract,” the labor group said. “We will hold this company accountable to our community and ensure these locations remain strong union employers.

“Since UNFI acquired Shoppers, we have requested, insisted and demanded to be given information on the fate of these stores. In response, we have been met with cold indifference,” the union added.

“Today's announcement reflects progress on our commitment to reduce UNFI's retail footprint and marks another step toward transforming UNFI into North America's premier food wholesaler,” Steven Spinner, UNFI chairman and CEO, said in a statement. “We believe that exiting the retail business will further accelerate our business transformation and allow us to more appropriately allocate resources toward long-term growth initiatives.”

In addition to Shoppers, UNFI is also seeking a buyer or buyers for its Cub Foods banner based in Minneapolis. Other former Supervalu-owned banners have similarly been sold in chunks over the past two years, including Farm Fresh in Virginia, Shop ’n Save in the Pittsburgh and St. Louis areas, and Hornbacher's in North Dakota.

“We will continue to wind down our retail footprint in a strategic and thoughtful manner to achieve the goals previously outlined. As we do this, we greatly appreciate the loyalty of our associates and the tremendous service they have provided to our customers,” Spinner said.

UNFI in a filing said the company expects to incur about $32 million to $42 million in pretax aggregate costs and charges related to the transactions, consisting of $13 million to $16 million of estimated severance and employee-related costs; $11 million to $14 million of estimated operating losses during the period of wind down, primarily related to inventory; $2 million to $3 million of estimated transaction costs; and $6 million to $9 million of estimated noncash asset impairment charges, primarily associated with real estate assets and leasehold improvements.

The Food Partners LLC advised UNFI on these transactions.

Stores To Be Sold to Compare Foods

Alameda — 5600 The Alameda, Baltimore

Anchor Square — 6500 Eastern Ave., Baltimore

Colmar Manor — 3831 Bladensburg Road, Colmar Manor, Md.

Coral Hills — 4801 Marlboro Pike, Capitol Heights, Md.

King Shop — 7051 Martin Luther King Jr. Highway, Landover, Md.

Stores To Be Sold to McKay's Foods

Waldorf — 1170 Smallwood Dr., Waldorf, Md.

Lexington Park — 22599 MacArthur Blvd., California, Md.

Stores To Be Sold to Lidl

Annapolis — 2371 Solomons Island Road, Annapolis, Md.      

Brooklyn Park — 5722 Ritchie Highway, Brooklyn Park, Md.                                                

Oxon Hill — 6111 Livingston Road, Oxon Hill, Md.

Rolling Valley — 9274 Old Keene Mill Road, Burke, Va.

Takoma Park — 6681 New Hampshire Ave., Takoma Park, Md.

Wheaton — 2201 Wheaton Road, Wheaton, Md.

Stores To Be Closed

Bull Run — 10864 Sudley Manor Dr., Manassas, Va.

Liberty Road — 1812 Liberty Road, Baltimore

Quarterfield — 7858 Quarterfield Road, Severn, Md.

Potomac Yard – 3801 Richmond Highway, Alexandria, Va.

This story has been updated with additional information on store buyers.

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