PLEASANTON, CA-Executives at discount-apparel chain Ross Stores say they are buying 46 stores from Albertsons LLC in six states. No purchase price was given for the supermarkets, but management reveals that it will cost between $1.5 million and $2 million to convert each unit into Ross Stores.
The converted Albertsons will be part of Ross' expansion plans for next year, which is a project 11% to 12% increase from the 766 Ross and 26 dd's Discount units it currently operates. The acquired Albertsons, in California, Florida, Texas, Arizona, Colorado and Oklahoma, will be turned into stores in both Ross Stores chains.
"Availability of quality retail locations is generally limited in these more established areas," says Michael Balmuth, Ross' vice chairman, president and chief executive officer, in a statement. "As a result, we believe this transaction offers a rare chance to enhance our long-term growth prospects and returns by adding these stores, almost all in our highly productive, core Sunbelt states."
Locally based Ross' management expects to have control of some of the stores by November and will finish conversions in those units by March. Capital expenditures by the retailer are forecast to increase $10 million during the current fiscal year.
Albertsons LLC is group made up of an entity led by private-equity firm Cerberus Capital Management, which includes Kimco, Schottenstein Stores Corp., Lubert-Adler Partners and Klaff Realty that bought 700 Albertsons stores early this year, when the grocer was acquired and went private. Grocer Supervalu took just over 1,100 of Albertsons' grocery stores and CVS took Albertons' 700 drugstores.
In its most recent quarter, which ended Ross' year-over-year same-store sales rose 5%, followed by a 6% increase in September.
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