OKLAHOMA CITY -- Homeland Stores here is conducting an extensive assessment of its capital investment needs in the wake of its emergence from Chapter 11 bankruptcy earlier this month, Larry Willis, the company's new president and chief executive officer, told SN last week.
Once the assessment is completed, Homeland will submit a formal funding request to its new parent company, Associated Wholesale Grocers, Kansas City, Kan., Willis said. "AWG is committed to providing capital funds so we can do the things we need to do to take us into the future," he said.
However, it will probably take about a year "to get everything we need to where we need it," he added.
Willis also told SN Homeland has tentative plans to relocate its headquarters. But it does not plan to spin off any of its 43 stores to independent operators, nor does it contemplate any further personnel reductions, he said.
Homeland's stores accounted for a volume of $511.6 million for the year ended last December, when it was operating 44 stores. Since filing for financial reorganization under
Chapter 11 in August 2001, the chain closed 31 stores in Oklahoma, Texas and Kansas, leaving it with 43 stores in Oklahoma.
When AWG acquired Homeland earlier this month, it formed a new subsidiary, Associated Retail Grocers, to oversee Homeland -- along with its other corporate chain, Falley's, Topeka, Kan. -- and hired Willis to run the 43-store Homeland operation. Willis formerly headed Ramey/Price Cutter, Springfield, Mo., and IGA, Chicago.
Willis said operating Homeland as part of AWG's corporate store group will be an advantage "because AWG is a strong company, and it will probably be easier for us to get some of our capital needs met as part of AWG than if we were an independent company.
"In addition, after Homeland has gone through two Chapter 11s, a lot of vendors who might not be willing to give us the grocery terms we need to operate efficiently will be encouraged by our ownership by AWG."
According to Willis, all 43 Homeland stores are operating "very well, and we are a strong company."
However, the stores need "a lot of work," he acknowledged. "The company did a good job operating during the Chapter 11 period, and the in-stock condition is pretty good. Some vendors gave the company a hard time initially, but once the legal proceedings began, management was able to operate the stores efficiently.
"Right now all our stores are in core markets in Oklahoma, and we're trying to understand what's going on in each community to determine our marketing plans.
"Some stores need a lot of work, but we're still in the process of determining what they need. We hope to invest some money this year on painting some stores, replacing equipment, patching up leaky roofs and taking care of other basic fix-up things that were not done during the Chapter 11."
Once the company determines its capital needs, it plans to put in a request to AWG "very quickly," Willis said. However, he declined to say what kind of capital budget Homeland will ask for nor when remodeling activity will begin.
Homeland has no plans to close any stores, Willis said. "That's why we went through Chapter 11 -- to eliminate underperforming operations."
It does not contemplate spinning off any store locations to independent operators, he added -- an apparent change in thinking from comments Gary Phillips, AWG's president, made to SN last June, when he said the distributor planned to operate the Homeland locations as corporate stores "for the near term" but would ultimately look for opportunities "to put them into the hands of independent operators."
Willis said that plan is no longer under consideration. "All Homeland stores will continue to operate as part of Associated Retail Grocers," he said. ARG, the retail arm of AWG, is headed by Larry Anderson, who is based in Des Moines, Iowa.
Willis said Homeland expects to relocate its headquarters from a suite of offices here to more modest surroundings, with accounting and MIS functions moving into an AWG-owned facility here in mid-October and administrative operations tentatively set to move to a store in Edmond, Okla., at a future date.
That store, located seven miles north of here, is 65,000 square feet, "but we don't need that much space," Willis explained, "so we're in the process of carving 10,000 feet out of the existing floor space."
He said he isn't sure when the move will take place.
Asked why the move is being made, Willis replied, "When vendors come to our [current] headquarters in an office tower, it presents the wrong picture of what we're trying to do. But relocating our operations to a 10,000-square-foot section in a store will put us closer to the employees and enable us to do a better job."
The company has completed most of the personnel cutbacks it plans to make, Willis said, though he declined to cite specific numbers. "When the Chapter 11 ended, we didn't re-hire all the staff and store people we had," he told SN. "We eliminated some administrative and buyer positions at corporate, and we cut back on staffing at some stores."
Homeland will continue to operate single-format conventional stores, Willis said, and while the merchandise mix will be geared to the needs of each neighborhood, "pricing will be fairly consistent."
Regarding possible acquisitions, Willis told SN, "Our focus will be on taking what we've got and doing something with those stores. But if something comes along and it makes sense, we could acquire additional stores."
Given a Challenge
OKLAHOMA CITY -- Larry Willis was named president and chief executive officer of Homeland Stores here earlier this month.
However, he has been thinking about the job and the challenges it poses since last February.
That's when Willis resigned as president and CEO of Ramey/Price Cutter, Springfield, Mo. He told SN he was thinking about buying some stores to operate when he got a phone call from Gary Phillips, president and CEO of Associated Wholesale Grocers, Kansas City, Kan.
"He asked if I would be interested in the Homeland job, and I said I was interested, so we kept talking on and off over the next few months. But we couldn't come to any agreement until AWG knew more about when the Chapter 11 would end.
"Late last spring Gary [Phillips] asked if I would interview with Larry Anderson, who was doing consulting work with AWG on their retail operations, and I met with Larry and accepted the job."
Willis told SN he was interested in joining Homeland "because I enjoy the retail side of the business and I enjoy working with stores that need assistance, and I'm looking forward to the challenge here."
He acknowledged that Homeland still faces the same competitive challenges it faced before and during the Chapter 11 period: competition from Wal-Mart supercenters and Albertsons. "Those challenges are still ahead of us," Willis told SN. "But our goal is to address the needs of our customers and do a good job filling those needs."
Willis spent a year and a half as president and CEO of Ramey/Price Cutter, a chain of 26 stores based in Springfield, Mo. Before that, he was president and chief operating officer of Standard Fruit and Vegetable, a Dallas-based produce distributor, for a year following four-and-a-half years as president, chief operating officer and chief financial officer of IGA, Chicago, and 14 1/2 years with Fleming.
