Giant Eyes Genuardi's: Source

JON SPRINGER

NORRISTOWN, Pa. — Speculation continued last week around the possible sale of at least some of the remaining Genuardi's stores, with Ahold’s Giant-Carlisle chain said to be a likely suitor.

A spokesman for Pleasanton, Calif.-based Safeway, which owns Genuardi’s, declined to comment last week. A Giant spokesman told SN that the chain would not comment on market speculation.

However, a local source told SN that Safeway officials were conducting inventory and equipment evaluations at Genuardi stores last week — often a signal of the final stages of a deal. The source, who spoke on the condition of anonymity, said Giant-Carlisle could announce the acquisition of a group of Genuardi stores in as soon as 30 days.

“This is going to happen,” the source said.

Industry observers have been tracking a potential Genuardi’s sale for years. Acquired by Safeway from its family founders in 2001, Genuardi’s has struggled, shrinking from a 39-store chain at the time of its acquisition to 29 stores — 28 including an Eagleville, Pa., Genuardi’s scheduled to close this week. Observers said the chain lost some local appeal as a result of merchandising changes, but was also caught up in a market upheaval amid expansion by Wal-Mart Stores, Target, Giant-Carlisle and ShopRite in Philadelphia. Clemens, Acme and A&P’s SuperFresh have also struggled in the market.

“Genuardi’s is a good company, it just wasn’t big enough to give Safeway the size or scale to take on the new competitors,” Burt P. Flickinger III, managing director of Strategic Resource Group, New York, told SN last week.

Flickinger said he was unaware of an impending deal beyond market speculation, but said Safeway could benefit either by using proceeds from a sale to invest in its thriving Washington, D.C.-area stores, or by continuing to compete in Philadelphia by gaining business from other shrinking chains such as SuperFresh.

Giant-Carlisle last year picked up former Genuardi’s stores in Warrington and Feasterville, Pa., that had closed, converting them to the Giant banner earlier this year. Its parent Ahold has made no secret of its desire to grow by acquisition, while Giant in recent years has expanded from its central Pennsylvania base closer to Philadelphia with new and acquired stores.

One source told SN last week that while it is likely Giant would buy some Genuardi’s stores, others would likely go unsold as a result of having continuous operating clauses in their leases, poor locations or sites in overstored markets.

The source confirmed reports surfacing last month that Safeway was exploring a sale of Genuardi’s, and talking to various wholesalers and retailers.