Ukrop’s to sell 25 stores for $140 million

After more than 72 years, the Ukrop’s family is out of the retail grocery business.

Royal Ahold, the Dutch supermarket operator that owns the Giant chain of grocery stores, will buy 25 stores from Ukrop’s Super Markets for $140 million. The deal is expected to close during the first quarter of 2010.

Its subsidiary Giant-Carlisle operates more than 150 stores in the Mid-Atlantic, including some that operate under the Martin’s brand name.

Ukrop’s CEO Bobby Ukrop, joined by his brother Jim, announced the news at a press conference Thursday afternoon. The local grocery chain was founded in 1937 by their father Joseph.

“They are a lot like us. They have similar values and a similar culture,” said Bobby Ukrop.

Giant-Carlisle’s origins go back to 1923 when it was founded as the Carlisle Meat Market in Carlisle, Pennsylvania. It was sold to Royal Ahold in 1981.

Ukrop said the stores will continue to operate under the same name for the short-term as the new owners take time to study the business and plan gradual changes.

Not included in the deal are the Fredericksburg store and the Joe’s Market owned by Ukrop’s located in Richmond’s West End. Those stores will eventually be closed.  The nearest Giant Food Stores are in Charlottesville and Fredericksburg.

While the family is leaving the retail business, Ukrop said the Ukrop’s Food Group will continue as a food producer and bakery, with Giant-Carlisle a primary customer. First Market Bank will also continue to operate branches at the store.

Jim Ukrop, who served as CEO of the supermarket before his brother, said one reason the family decided to sell is because it found itself at a competitive disadvantage.

“Our size limited our ability to succeed in today’s increasingly competitive grocery market,” he said.

According to a required filing with the Office of Thrift Supervision related to First Market Bank, the grocery store lost $1.4 million in the third quarter of this year, earning a total income of $140 million.

The company’s total assets as of September 30 were listed as $233 million, with liabilities of $145.9 million.

The elder Ukrop addressed the notion that even if they had begun selling alcohol and keeping Sunday hours, it would only have bought the business a few more years before it found itself in a similar position.

Rick Herring, the division president of Giant-Carlisle, said that over the next few months the company would be making decisions as to whether the stores will open on Sundays or sell beer and wine over the next few months, and not until then.

“We look forward to building on the heritage of this great company, I’d say in Richmond it is more of an institution,” Herring said.

Current retail associates will be rehired, he said.

“Our goal is to remain an employer of choice,” said Herring.