Stater Bros., Fred’s Make Pharmacy Deals

Stater Bros. Markets is winding down its 22 SuperRX pharmacies currently operating in its stores and said it will redeploy the space to meet emerging food trends.

The San Bernadino, Calif.-based food retailer said it expects to complete the sale of pharmacy records and inventory to nearby CVS stores shortly and that SuperRX pharmacies in Stater stores will close by Sept. 28.

“I’d like to emphasize that Stater Bros. is a strong and competitive company within the Southern California supermarket landscape poised for continued growth,” Stater Bros. CEO Pete Van Helden said in a statement. “This business decision will allow the company to grow areas of our core food business that meet the evolving food needs and shifting grocery preferences of our customers. We remain committed to providing our valued customers with the very best grocery shopping experience.”

Stater Bros.—which is in the midst of a renovation spree that saw five units reopen this month with new lighting and features like expanded grab-and-go foods, sushi and bulk foods—said its stores will remain open while the company converts the former pharmacy space.

Stater operates 171 stores overall in California’s Inland Empire. The SuperRX units were located in stores in Palm Springs, Fullerton, Temecula, Lake Forest, Huntington Beach, Encinitas, Poway, Chino Hills, Corona, Moreno Valley, Beaumont, Wildomar, Fontana (two locations), Adelanto, Winchester, Apple Valley, San Jacinto, Highland, Chino, Moreno Valley and Carlsbad.

Stater earlier this year said it was expanding a generic prescription program to better serve pharmacy customers but Van Helden acknowledged CVS would provide “customers with the resources and services needed to continue their healthcare regimen.”

CVS is expected to interview many of the SuperRX pharmacy employees.

In a separate deal also announced this week, Walgreens is acquiring the pharmacy files of 185 units of the Memphis-based general merchandise discounter Fred’s Inc.

Fred's plans to use proceeds of approximately $165 million to address debt, and said it would continue to operate its retail stores at most of these locations after the pharmacies close. Once the transaction is complete, Fred’s will operate approximately 162 pharmacies across nearly 600 stores.

“With this agreement, we have taken a major step towards achieving one of our main goals of eliminating our debt balance,” said Joe Anto, interim CEO and CFO of Fred’s. “We look forward to partnering with Walgreens to transition our pharmacy patients in these locations as smoothly as possible.”

The deal gave a jolt to Fred's stock, which has been struggling since a previous effort to acquire some Rite Aid stores failed. The announcement also followed the high-profile failure of a Albertsons' subsequent Rite Aid deal, an continue to illustrate a need for retail drugstores to gain additional scale amid incursion form companies like Amazon and Walmart reportedly looking to get deeper into the health-care space.