Kroger divests interest in Lucky's Market

[Bakeragr]

I visited the Lucky’s Market in Springfield, MO the weekend after Christmas. It is one of the stores marked for closure. It was pretty busy, and was a nice store. It didn’t have the selection of wine and beer that I had expected, but I found several appetizer-type items that were pretty cool.
I would guess this location has pretty high rents, as it’s in about the busiest stretch of road in the main retail shopping area in town, and it was brand-new construction when it opened.
Ironically, Price Cutter, a local AWG-supplied operator, closed their incredibly similar formatted store, Ruby’s Market, right after Lucky’s opened. Now they’ll both be gone! It lasted all of two years. Honestly, the overhead must be too high, because there aren’t a lot of similar stores in this market. There’s a local operator called Mama Jean’s and a large Hy-Vee (with a big organic section) and another one on the way.
If I remember right, this location was originally going to be a Fresh Market before they closed their Midwest locations.
PS, I did see several Simple Truth brand products in the store.

[storewanderer]

Wow, what a mess.

14 stores under construction in FL, some already finished, not opening...

It appears they did not announce 7 stores for closure today: two in CO, two in OH, one in MI, one in MO, one in FL. Tough to understand why they are continuing with a very strange geography assuming they do plan to run those 7 stores long term.

My only experiences with this chain were in Columbia, MO about 4 years ago and in some Indianapolis suburb about a year ago. The Columbia Store seemed healthy (and is one of the 7 stores that was not announced for closure). The IN store did not seem too healthy and a good amount of the fruit I bought there was not so fresh.

Something about the chain... seemed to be lacking. Center store seemed to be oddly and poorly merchandised. I expected Kroger to help with that, but it seems Kroger just started to put Simple Truth stuff in there... about six months ago?

I got the impression they were not doing near the volumes they needed to support the amount of fresh product they were having on display and the atmosphere in the stores seemed a little too casual but I understand that was part of the whole concept.

Kind of sorry to see this one go as it was a unique concept. It did not feel like an identical copy of Sprouts like most of these other similar formats do. Actually it came off more like the old Wild Oats chain. This chain's stores did have a unique feel and personality. I am not really sure how much that mattered to most customers.

I will be curious to see how many locations Sprouts takes. Sprouts has 20% the amount of fresh product as this format had and presents as a format that the customer perceives as very similar. Assuming the demographics were right for this format in the locations selected, Sprouts could have some real good opportunity to take some stores over, run them on a lower cost structure, and maintain the customer base.

I guess I kind of wonder why Kroger allowed the losses to pile up this long and continue rapid expansion...

[Alpha8472]

Invest in other supermarket chains just to make them go out of business... Sabotage from within.

[storewanderer]

I see today this Lucky's Market filed bankruptcy.

Kroger did not directly compete with most of these locations so I am not entirely sure if this was the result they were looking for in this.

It also doesn't appear they are taking stores as we see today 11 stores are being sold to Aldi and Publix (I guess all in FL).

Surprised Sprouts is not taking any of these. Maybe this all happened too quickly for Sprouts to, uhh, sprint.

I find it ironic Kroger is letting $238 million be written down on this yet hasn't bothered to build a new Ralphs, a new QFC, or new Fred Meyer (I'm not talking a replacement store, I'm talking an actual new store serving a new trade area) in how many years?

[rwsandiego]

Looking at the breakneck rate of expansion into far-flung markets I'm not surprised Lucky's Market never turned a profit. After Sprouts started out small and expanded in the Southwest before buying Henry's (a logical choice, given the Boney family started both chains), Sunflower, and other regional chains. Once they established themselves they started expanding nationally. Not sure what Lucky's strategy was. Spending Kroger's investment? Also not sure why Kroger allowed them to run amok.

I don't think Kroger invested in them with the intent of shutting down a competitor, mainly because they didn't compete with one another when Kroger made the investment. It feels like Kroger wanted in on the organic/natural/farmer's market type of store and found a business to invest in. Unfortunately, they didn't choose wisely and didn't stop to think "hey - there's this store called Sprouts that's popping up like mushrooms after a rain storm." And then there's the matter of choosing Florida as the place to put most of the new stores. Apparently, nobody told them about the "P" word.

[klkla]

I wonder if the stores Publix is buying will be for their GreenWise format. That would seem to be a natural fit.

Say what you may about Publix, but they definitely protect their home territory.

[klkla]

The remaining seven stores will be sold to the founders of the chain, Bo and Trish Sharon.

"The stores that will continue to operate under the Sharons are in Traverse City, Mich.; Cleveland and Columbus, Ohio; Columbia, Mo.; Melbourne, Fla.; and North Boulder and Fort Collins, Colo. These locations employ about 600 associates. Lucky’s said the proposed sales are subject to court approval and an overbidding process. "

https://www.supermarketnews.com/retail- ... ing-stores

[pseudo3d]

The remaining seven stores will be sold to the founders of the chain, Bo and Trish Sharon.

"The stores that will continue to operate under the Sharons are in Traverse City, Mich.; Cleveland and Columbus, Ohio; Columbia, Mo.; Melbourne, Fla.; and North Boulder and Fort Collins, Colo. These locations employ about 600 associates. Lucky’s said the proposed sales are subject to court approval and an overbidding process. "

https://www.supermarketnews.com/retail- ... ing-stores

Why are the locations so far-flung, and what makes them special? I have a feeling that the post-bankruptcy Lucky's don't have much of a chance in the long term.

[storewanderer]

The remaining seven stores will be sold to the founders of the chain, Bo and Trish Sharon.

"The stores that will continue to operate under the Sharons are in Traverse City, Mich.; Cleveland and Columbus, Ohio; Columbia, Mo.; Melbourne, Fla.; and North Boulder and Fort Collins, Colo. These locations employ about 600 associates. Lucky’s said the proposed sales are subject to court approval and an overbidding process. "

https://www.supermarketnews.com/retail- ... ing-stores

Why are the locations so far-flung, and what makes them special? I have a feeling that the post-bankruptcy Lucky's don't have much of a chance in the long term.

Well, before Kroger showed up they had 17 stores in 13 states. They have always had an odd far flung geography with little concentration anywhere. Again very similar to the old Wild Oats chain. I have to assume they were profitable when Kroger invested in them otherwise why would Kroger have invested in them?

It will be interesting to see if anyone outbids them on these 7 stores they plan to retain.

Happy to see the format may keep going. It will be funny if it expands again in the future. I really think the FL entry tanked them.

[Bakeragr]

I read in a Cincinnati Business Journal article that according to Kroger filings, they had a 55% stake in Lucky’s. With a majority ownership, I’m shocked that they pulled the plug, and if so, that they don’t seem to have any interest in any of the stores. I’d think that they’d have interest in ones that overlapped with their existing footprint.
Lucky’s must be insanely unprofitable to just cut and run like that.
The Columbia, MO store appears to be staying open and in the hands of the founders. It was one of the original stores. It competes with two of Kroger’s Gerbes stores.
Fun fact, the building that houses Lucky’s was formerly an Osco Drug and before that was a Skaggs. I think that was what it was originally built as.