The deal will give an enlarged retail operation of more than 500 stores to the private company, which supplies nearly 7,500 supermarkets nationwide.
Most of C&S Wholesale's retail operations are more than 100 Piggly Wiggly stores in Wisconsin and the Carolinas and 11 Grand Union stores in New York and Vermont. The company also supplies and franchises the Piggly Wiggly name to independent owners, which spreads the Piggy Wiggly brand to more than 500 supermarkets nationwide.
The deal will also affect "thousands" of Kroger and Albertsons workers, though the companies offered no further specifics or estimates.
As part of the store divestiture deal, Kroger will sell off two of its store banners: Marianno's in Chicago and QFC in the Pacific Northwest, while Albertsons will shed the Carrs nameplate in Alaska and grant exclusive license to its own name in Arizona, California, Colorado and Wyoming. Kroger noted the companies will rebrand some stores that will lose their current banner name as part of the deal.
Kroger and Albertsons to shed stores in 17 states
Stores in 17 states and the District of Columbia will be affected:
-104 Albertsons Cos. and Kroger stores in Washington
-66 Albertsons Cos. and Kroger stores in California
-52 Albertsons Cos. stores in Colorado
-49 Albertsons Cos. and Kroger stores in Oregon
-28 Albertsons Cos. stores in Texas and Louisiana
-24 Albertsons Cos. stores in Arizona
-15 Albertsons Cos. stores in Nevada
-14 Kroger stores in Illinois
-14 Albertsons Cos. stores in Alaska
-13 Albertsons Cos. stores in Idaho
-12 Albertsons Cos. stores in New Mexico
-12 Albertsons Cos. stores in Montana, Utah and Wyoming
-10 Harris Teeter stores in Washington, DC, Maryland and Virginia
The deal is subject to Kroger and Albertsons closing their merger. The companies added the deal may require C&S Wholesale to purchase an additional 237 stores from Kroger and Albertsons, in conjunction with securing regulatory approval.
Kroger and Albertsons are also selling off eight distribution centers, two offices and five private label brands as part of the transaction.
Albertsons employee Shelly Elmquist gathers shopping carts at the Albertsons parking lot located at the Desert Ridge Marketplace in Phoenix in early 2023.
Kroger, Albertsons, C&S Wholesale seek to assure skeptics
C&S Wholesale will honor existing union contracts of workers affected by the transaction. Kroger and Albertsons said the deal fulfills their promise their merger won't result in store closures or layoffs.
Looking to quell potential criticism that Kroger and Albertson are pawning off stray stores on smaller operator, Kroger CEO Rodney McMullen said in a statement they sought out a strong, viable competitor to take over stores they need to part with due to regulatory antitrust concerns.
"(After announcing the Albertsons deal), we embarked on a robust and thoughtful process to identify a well-capitalized buyer who will operate as a fierce competitor and ensure divested stores and their associates will continue serving their communities in the ways they do today," McMullen said.
Ditto, said Albertsons CEO Vivek Sankaran: "I am thrilled that C&S's outstanding capabilities and financial strength will ensure these divestiture stores can continue to grow and serve their communities," Sankaran said in a statement.
The 2015 bankruptcy of Washington-based grocer Haggen following the acquisition of 146 divested stores from the Albertsons-Safeway merger has been cited by deal skeptics as Kroger and Albertsons pitched their transaction to regulators.
Incoming C&S Wholesale CEO Eric Winn (currently the chief operating officer) also offered an early welcome to thousands of workers that would join his company.
"We look forward to welcoming thousands of new associates to the C&S family and providing them the opportunity to build long and successful careers," Winn said in a statement.
Last fall, Kroger announced a proposed $25 billion takeover of supermarket rival Albertsons, a deal that would be one of the largest retail mergers in history. Until now, the deal would have given Kroger nearly 5,000 stores and 700,000 workers before an undetermined number of divestitures. The new math would give Kroger around 4,600 stores with a lower, but unspecified worker headcount.
Kroger results miss Wall Street forecasts as grocer settles opioid lawsuits
In other news, Kroger posted on Friday a $180 million loss on sales of $33.9 billion, missing Wall Street expectations.
The supermarket giant swung to a loss as it booked a $1.4 billion charge in connection with its opioid settlement, which included a $1.2 billion payment to states and other governments as well as $177 million in atttorney fees and costs. Excluding one-time items, Kroger's profit exceeded analysts' forecasts, but its sales fell short of the $34.3 billion consensus estimate, according to Zacks Investment Research in Chicago.
Identical store sales excluding fuel increased by 1% during the fiscal quarter that ended Aug. 12 – a key metric that measures sales growth excluding new or closed stores. Last year, Kroger posted a $731 million profit in the second fiscal quarter on sales of $34.6 billion.
In addition to Kroger stores, the Cincinnati-based grocer operates several regional supermarket chains in 35 states, including Fred Meyer, Harris Teeter, Ralphs, Mariano's, Fry's, Smith's, King Soopers, QFC and others. The company has more than 2,700 stores and employs 430,000 workers.
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