Real good fit for Spartan. Not only does it give them a larger base of retail to support wholesale initiatives, it also expands their geographic base and brings some of the Food Emporium best practices to some of their current stores, and vice versa. Having a background in the Detroit market can only help as well, from a management perspective.

Typically, any stores operated by A&P are not a good fit for anyone: high rents, demoralized employees, low volume stores, and cap-ex starved buildings. Not a good start going up against Kroger and Meijer. Now Wal-Mart is making its way into metro Detroit. Spartan was laughed out of Toledo when they were forced to close and sell all the Food Town stores shortly after acquiring them. Spartan has also not fared well going up directly against Wal-Mart and Meijer in rural Michigan. Is this just another CEO wanting to exercise his ego against his former employer? Spartan’s best bet is to get these stores in the hands of experienced independent retailers. One of the biggest problems will be dealing with a demoralized union workforce that has taken pay cut after pay cut. If Spartan does buy Farmer Jack, they should have an exit strategy in place before they buy.

Craig and Dennis certainly know the market and the stores. And despite it all, Farmer Jack has many very good locations.

But my guess would be that they will try to flip many, if not most, of these stores to independent operators. They will probably do this in return for supply agreements for these stores… and perhaps supply agreements for operators that are currently supplied by another wholesaler, but who badly want one or more of the FJ locations.

What a great opportunity. I have not seen one this good since Scott Lad bought the A&P stores in Chicago. I have been out of town for a while. Can anybody tell me Scott Lad’s stock price?

Spartan has 6 quarters in a row of increasing earnings. A year ago, the stock price was less than $4. It peaked at $15.50 this summer, but it’s now at $10.30. Farmer Jack was a customer of Spartan, and the Spartan management are FJ alumni, so their risk seems lower than any other buyer. I agree that an excellent strategy would be flipping the stores to independents in exchange for supply agreements. Even though the union is temporarily tamed, having approved the second rollback a few days ago, Spartan profits are still razor thin. Who needs the store operations headaches? The likely rewards aren’t lucrative enough.

This will be an interesting move on Spartan Stores. Not only will it expand their brand, but it will give them an opportunity to operate in the Detroit market, which has been dominated by both Farmer Jack and Kroger, in addition to Meijer and Super Kmart stores. At this point, it is mostly independent Spartan retailers that have operated in the Detroit market, and not a Spartan-owned chain like Family Fare or Glen’s Market. When Spartan Stores purchased Family Fare (Hudsonville, MI based), Glen’s Market (Gaylord, MI based), and Prevo’s Family Market (Traverse City, MI based), this enabled Spartan to strengthen these brand names, and the ties that it had to the communities that they operated in. In addition, you had the power of Spartan Stores to make these stores more successful and gain a better share of the shoppers in the community, compared to the stores when they operated as independent retailers with only a limited amount of marketing and purchasing power. With the exception of Food Town stores in Ohio and The Pharm… Read more »