Supervalu Announces Strategic Shift

The company has completed the sale and leaseback of seven of its distribution centers as part of a plan to transition away from the responsibilities of running traditional retail grocery stores.

Supervalu Inc. has completed a sale and leaseback of seven of its distribution centers as part of the company’s new strategic shift, transitioning from running traditional retail grocery stores to operating a grocery wholesale and distribution business.

The sale and leaseback of an eighth property is also in the works, and that should be finalized by October.

The facilities are located in Champaign, Ill.; Commerce, Calif.; Green Bay, Wis.; Harrisburg, Pa.; Joliet, Ill.; Oglesby, Ill.; Pompano Beach, Fla.; and Stockton, Calif.

The total of the eight facilities combine for nearly 5.8 million square feet of space, with an aggregate price of approximately $483 million. In a recent earnings call by the company, it was announced that proceeds from the sales would be utilized to reduce outstanding debt, including paying off a mortgage related to one of the sold facilities.

After the sale, the company signed 20-year lease agreements for each of the seven facilities, with five-year renewal options on each property.

On the Rise

Since announcing intentions of the shift on its last earnings call in April, the company’s stock rose approximately 11.6 percent. At the same time, Supervalu reported its revenue for the fourth quarter increased 42 percent to $3.6 billion thanks to acquisitions of Unified Grocers and Associated Grocers of Florida.

For its fiscal 2019, which began at the end of February, the company expects total revenue of somewhere between $15.5 billion to $15.7 billion and comparable sales to be flat to slightly positive.

May has been a busy month for distribution center news. Koontz Corp. has commenced construction on Foster Ridge Distribution Center, a 327,000-square-foot, cross-dock industrial property in San Antonio, Texas; Barrett Distribution Centers, a warehousing, transportation, distribution and fulfillment solutions firm, signed a 115,000-square-foot lease at Garland Logistics Center in Garland, Texas; and Onyx Equities has received approval to build a 120,000-square-foot distribution center in Mahwah, N.J.

Image courtesy of Supervalu