Shoppers Food & Pharmacy began late last month to shutter the all pharmacies it operates in the Baltimore-Washington market. Parent company United Natural Foods Inc. (UNFI) started closing the pharmacies on a staggering basis on April 23. The company sold the pharmacy prescriptions and inventories of 24 stores to CVS and another six stores to Walgreens. There are currently 44 Shoppers stores in operation in the Baltimore-Washington market (not all have pharmacies), down from 51 in 12 months. The last pharmacies reportedly closed on May 7.

UNFI announced the pharmacy shutterings in early April to employees and to UFCW Local 400, which represents Shoppers’ pharmacy technicians and non-managerial employees in Virginia and in Montgomery and Prince George’s counties in Maryland, and UFCW Local 27, which represents the same categories of workers in the Baltimore area. Several union officials said that they were told of the pharmacy closings only an hour before the announcement was made.

Even before its sale to UNFI, Supervalu had been seeking to sell or close the several regional chains it operated, including the two regional chains it owned in the Mid-Atlantic. In March 2018, Supervalu announced that it had entered into three separate definitive agreements to sell 21 of its 38 Farm Fresh Food & Pharmacy stores in the Tidewater region of Virginia for approximately $43 million in cash to two different retailers that operate three different banners: Kroger/Harris Teeter and Food Lion. The remaining stores were all shuttered after failing to find buyers.

Advertisement

Two months later, Supervalu continued to pare operations, rolling the merchandising and administrative duties of its Retail-East operation (including 51 Shoppers Food & Pharmacy supermarkets in Baltimore-Washington and 22 former Food Lions that traded as Shop ‘n Save stores in Western Maryland, Central Pennsylvania and West Virginia) into its Retail-West division (Cub Foods and Hornbacher’s) based in Stillwater, MN, which also serves as Cub’s headquarters. Hornbacher’s was subsequently sold in late November 2018 to a current UNFI customer – Coborn’s

Then, in July 2018, UNFI announced a deal to acquire Supervalu for $2.9 billion (including debt); that acquisition was finalized in October 2018.

The deal was a big one for the Providence, RI-based company and industry observers had expected significant changes in the first six months of 2019, including a sell-off of its Shoppers locations. In fact, UNFI was candid from the outset that it would be divesting all remaining corporately-owned retail units. The process to sell Shoppers had actually been started months before the UNFI/Supervalu deal was announced and several retailers told Food World that bids for the Shoppers locations were due last November. During UNFI’s second quarter 2019 conference call, CEO Steve Spinner said he was confident that the sale would be completed in the “coming months.” However, to this point, except for a handful of stores that have been sold or closed, the majority of the sell-off has yet to be completed, which has angered Shoppers’ associates as well as other retailers who submitted bids on certain stores months ago.

Advertisement

That slow, plodding process has also annoyed UFCW Local 400 president Mark Federici who stated in a letter to Spinner last month: “Our members have been the backbone of Shoppers’ stores far longer than UNFI has had an interest in those stores and they deserve more respect than UNFI has shown in this process. They deserve to know what the future holds.”

A month later, Federici said he still wasn’t satisfied and was reportedly considering “appropriate action,” which may include the involvement of its members in Shoppers’ stores or the communities that it serves.

However, there have been challenges for UNFI since it acquired the Eden Prairie, MN wholesaler. Some of problems are obvious: poor earnings results; a share price that has plummeted from $45.14 per share on July 24 (the day before the Supervalu acquisition was announced) to its current trading price of $11.80 per share (on May 8); its significant debt load (most of which it inherited from SVU); and a major executional breakdown at its new Harrisburg, PA DC when it opened in October that created low service levels throughout the holiday season adversely impacting many retailer’s sales during their most important operating period.

With the closing of Shoppers’ pharmacies and the selling of its prescription files and inventories, many in the trade wonder if an announcement of store sales will now be close at hand.