VALU FOOD FILES CHAPTER 11, GETS LOAN

MICHAEL HARRISON

BALTIMORE -- Valu Food here said it has filed for Chapter 11 reorganization. The regional chain also secured $2 million in financing from its primary wholesaler and hopes to parlay that loan into viability.

The retailer will use the money to implement a six-month plan that Lewis Denrich, Valu Food president, said he believes will lead to viability. The loan, secured by a lien on Valu Food's inventory, was made by Supervalu Operations here, a wholly owned subsidiary of Minneapolis-based Supervalu.

"We have pretty much free use of that money to go forward," Denrich said. "We know we're not positioned well for the future, so we have been developing a new concept of merchandising our stores with an emphasis on price, convenience, quality perishables and customer service.

"Prior to this, we were at best adequate on customer service and perishables. We've always been known for our [low] prices."

According to Denrich, "We did some research to see what we've been viewed as. We found out we had certain weaknesses and we feel that if we improve those areas as opposed to just being adequate our sales will increase and we will become more viable."

The company closed four stores, described by Denrich as "smaller, suburban units that were somewhat rundown," and is currently operating 11 supermarkets. Also, "We're going to make some real fundamental changes over the next six months," he said.

The company also added a meal-solutions department, deli salad program and a bulk candy program. Denrich said sales rose 10% in September "so we're very optimistic with the future."

A more long-term plan is in the works, according to Denrich, and includes "getting financially strong enough that we can build new stores."

Rita Simmer, communications director at Supervalu, said "We're working with them in an effort at reorganizing in the hope they will create a smaller, more viable retail entity."