BRUNO'S SET TO DIVEST 13 ATLANTA-AREA UNITS TO INGLES

GREG GATTUSO

BIRMINGHAM, Ala. -- Bruno's here said it will sell 13 Atlanta-area supermarkets to Ingles Markets, Black Mountain, N.C., and exit the central and northern Georgia markets.

"Atlanta is a highly competitive area," Bruno's chairman and chief executive officer, James Demme, told SN last week. "You have Publix and Kroger fighting it out, and everybody else is caught in the middle.

"We only had 13 stores in that market. We didn't have the presence to compete, so we decided to get out."

Demme said the company would spread the proceeds of the sale -- which were not disclosed -- throughout the rest of the company, "where we can grow at a faster pace."

Ed Kolodzieski, Ingles vice president for strategic planning, told SN the company was looking at the purchase primarily as a real estate deal. In the transaction, Ingles would acquire two shopping centers, one company-owned store and 10 leased stores, with all furniture and fixtures.

The stores would be closed at the time the transaction closes and there would be no inventory in the stores at that point, he said.

"What we're trying to do is pursue all good business opportunities that come by," Kolodzieski said. "We're thinking of this as a real estate deal. But it may become a supermarket deal.

"We will go through the process of deciding whether to operate the stores ourselves, sell them to someone else or lease them to someone else. These are good locations. We may run all of them, we may run none of them. We will probably fall somewhere between those two extremes."

Kolodzieski said all except two of the stores are 48,000 square feet and are attractive sites for food retailers or nonfood superstores.

"It would make sense for an Office Max or a Circuit City to have a box that size," he said. Ingles currently has 77 stores in central and northern Georgia. He said Ingles would consider hiring Bruno's employees if Ingles decides to run the acquired stores as supermarkets.

"All our stores are in hiring mode. We're always looking for good people," he said.

Demme said Bruno's would continue to maintain its presence in other parts of Georgia, including a concentration in the southern part of the state, where it operates 36 stores under the FoodMax and Bruno's banners. He said Bruno's has no current plans to exit any other markets.

"We have developments going on in Chattanooga, Nashville, Alabama and Florida," he said. "We just opened a store in Nashville."

Bruno's currently operates 206 stores in Alabama, Georgia, Mississippi. Florida and Tennessee.

Demme said that at one point the company considered going head to head with market leaders Kroger Co., Winn-Dixie Stores and Publix Super Markets by opening more stores in the metro Atlanta market. But executives decided it was preferable to exit the area instead. "At this time the company is not in a position to invest more capital in the markets these stores serve," he said.

Bruno's said the sale would affect 961 hourly workers and 255 managers. All eligible employees would be offered severance packages. In addition, affected managers, co-managers, assistant managers, department heads and pharmacists are being considered for positions at other Bruno's locations, the company said.

Consummation of the transaction is subject to certain additional conditions, including receipt of required regulatory and other approvals. Officials expect the sale to be complete within about 30 days.

Financial terms of the transaction were not disclosed.