For the second time in eight years, Baltimore-based Mars Supermarkets is reportedly exploring options to sell its 13 remaining area supermarkets.
According to several sources, Washington DC-based private equity firm The Food Partners is serving as Mars’ agent in handling prospective bids.
In 2007, the family-owned firm also issued a prospectus as it explored its potential future options. At that time, the company operated 18 stores and a 300,000 square foot distribution center on Edison Highway in Baltimore. It is believed that Food Lion and Weis Markets both submitted bids in the low $50 million range which were not accepted. Sources at the time told us that they believed that Mars was looking for a deal in the $80 million range.
Many changes have occurred since then. In 2014, Mars closed its Edison Highway warehouse and named Bozzuto’s, Inc. as its primary grocery supplier. Eight years ago, Vito D’Anna presided over the regional supermarket operator, which at the time had estimated annual sales of $240 million. Vito has since left the company and the company is now run by his brothers Ted D’Anna and Chris D’Anna, who serves as chief executive. In 2007, it was also believed that possible estate planning issues played a role in Mars’ decision to explore a sale. The D’Anna brothers’ mother, Katherine, is said to maintain operating control of the independent retailer. Annual sales for its remaining 13 units are estimated at approximately $175 million.
Several trade observers believe that Mars’ potential market value has declined in recent years. Not only does the 72-year old merchant operate fewer units (four stores have closed this year alone), its overall same store sales have dipped for several reasons.
“The overall market has gotten more competitive, more overstored and with more diverse retail formats,” said one local food broker who has called on Mars for more than 25 years. “Mars has a great history and a wonderful culture, but they have done little to modernize their operation and its stores in general look old and tired.”
One retailer, familiar with the contents of the prospectus, said his concerns not only lie with the physical condition of stores, which he said would take significant capital investment to upgrade, but also with several burdensome rents and the nearly 50-50 ratio of full-time versus part-time workers that currently comprise Mars’ store level associate base.
Several observers noted that it would be difficult to visualize all 13 stores going in a package.
“Obviously, stores such as Wise Avenue and Holabird Avenue in Dundalk as well as supermarkets in Essex, Carney, Loch Raven, Arbutus and possibly Ellicott City would attract interest. As for the others, acquiring those stores would mean inheriting significant challenges,” said a retail executive whose company competes with Mars.
Phone calls to Chris D’Anna and Matt Morris of The Food Partners were not returned.
