Ukrop's Super Markets Reportedly Exploring Sale Options For Its 28 Virginia Stores
Over the past decade no area of the Mid-Atlantic region has changed more than the Richmond market. Not only has Kroger entered to become a formidable competitor, Wal-Mart’s 10 area units are all SuperCenters, Food Lion dots the landscape with 52 stores and newer entries such as Whole Foods, Trader Joe’s and The Fresh Market have all added to the overstoring of Virginia’s capital region.
Now it appears that Richmond’s oldest and most distinguished retail organization, Ukrop’s Super Markets, may be looking to sell its 28 units. Officially, the company wouldn’t address those reports specifically, noting that it doesn’t comment on rumors, but multiple industry sources confirmed to us that a prospectus has been issued detailing vital Ukrop’s store data and seeking interest in a potential sale. Those retailers who have reportedly responded to the prospectus include Supervalu (Ukrop’s principal supplier), Ahold and Harris Teeter (Ruddick Corp.). Several sources believed that Harris Teeter remains the frontrunner and that Supervalu (which currently has many issues on its plate) has dropped out the potential acquisition process.
Of course, there is no guarantee that any bidder would pay the premium price that acquiring Ukrop’s would likely demand. And even if that price were met, it wouldn’t be surprising to see the deal be pulled by the Ukrop family which has a deep emotional attachment to the community and to the company itself, which was founded when Joe and Jacquelin Ukrop opened their first grocery store on Hull Street in Richmond in 1937.
While newer competition may have been able to match Ukrop’s beautiful stores and perishables-driven format, a key differential which has also adversely impacted the company is its policy of not opening on Sundays, now the busiest shopping day of the week. Ukrop’s also does not sell beer or wine at its stores. Additionally, two of Ukrop’s newer stores outside the core Richmond market – Roanoke and its second unit in Williamsburg – have struggled, with the Williamsburg unit closing last year.
Trade observers speculate that the timing may be right to consider a sale, given that CEO Bobby Ukrop is 62 years old and his older brother, Jim, who was CEO of t he company for 24 years and until recently served as chairman, is 71 years old. For the past 10 years, Jim Ukrop has devoted most of his time into First Market Bank, a venture created in 1997. Today First Market has 40 branches (26 inside Ukrop’s units) and earlier this year the company was merged into Union Bankshares, another large Virginia based bank where Jim Ukrop remains a director.
Both brothers have seats on Ukrop’s board and other family members are or have been involved in the privately-held company over the years. Those include Jim’s sons, Scott (who left the company a few years ago but remains a director) and Ted; and Bobby’s sons Jeff and Rob, his daughters Jacquelin, and Nancy Jo and his son-in-law Scott Aronson.
Until this year, Ukrop’s has been the market share leader in Richmond since 1986 when it surpassed Safeway (no longer in the market). Its share peaked in 2001 when it captured 40.89 percent of Richmond’s supermarket business and 23.8 percent of the market’s overall food and drug pie. This year, Food Lion, with more than twice the number of stores, garnered 19.34 percent of the market’s business versus Ukrop’s 17.58 percent. In addition to its 28 stores, Ukrop’s operates a central kitchen and bakery. The company employs approximately 5,600 associates. Annual sales for the past year were $590.4 million.