Harris Teeter confirms its weighing private equity offers

Feb. 15, 2013 @ 05:23 PM

It turns out, rumors of Harris Teeter's sale may not have been greatly exaggerated. 

The Matthews-based grocery store released a statement Thursday confirming the retention of J. P. Morgan as a financial advisor. 

"(Harris Teeter) was approached by two private equity firms who expressed an interest in purchasing (Harris Teeter)," the statement read. 

The statement affirms their intent to continue with its strategic new store growth plan, maintain employment and maintain distribution and manufacturing facilities. 

"There can be no assurance that these discussions will result in any transaction," the statement read. "If a transaction were entered into, there can be no assurance as to the price, timing or other terms of such transaction. (Harris Teeter) does not plan to provide any additional information until such discussions are concluded."

Shoppers have been flooding the Harris Teeter Facebook page with support and pleas to not sell the chain. 

Outside of the Harris Teeter in Monroe, similar sentiments were echoed. 

"I love Harris Teeter," Monroe Resident Kim Furr said.

She added that she would be very disappointed if they sold. If they did sell the company, she hoped they would maintain the name and store. 

Waxhaw Resident Alesha Ester also likes Harris Teeter. 

"I like the fact they have double coupons," Ester said. 

Jessica DePedro, a Monroe resident, recently moved back from an area that did not have Harris Teeter, so while she likes Harris Teeter, she was not sure how she would feel about a sale. 

"I would hate for them to sell it," another shopper said. 

However, she added, if the new owners keep the fresh produce, fresh meat and "run it as good as Harris Teeter" that would be fine with her. 

If a private equity firm did buy the store, what they would do with it would depend on the value of the purchase and the forecast moving forward, Peter Frank, an associate professor of economics at Wingate University, said. The firm would determine if it was more valuable to maintain the store or divest and find a higher bidder. 

There are already many different grocery chains in Union County and the Charlotte area. 

"I think that when it comes to these highly competitive issues like grocery stores, the margins for any individual grocery store are very small," Frank said. "As grocery stores compete and try to compete with the giants like Wal-Mart, they can only do so by massive volume...they can't compete if they only have a few locations."

Harris Teeter sold several stores to Lowe's Foods in the past. They swapped locations to consolidate a little more geographically, Frank said. 

"That is a move to try to reduce transportation and distribution costs," Frank said. "(To) maintain advantage against brutal competition."

"They've tried to come up with a lot of different ways to reduce their cost and remain competitive," Frank said. 

Frank found the sales rumors a little surprising, though he did not know what the top executives are thinking in terms of finances and their responsibility to investors. 

Reports from Jan. 31 showed an increase in first quarter sales compared to first quarter sales in 2012. The sales increased by 3.7 percent to $1.16 billion in the first quarter of 2013, according to a release from the company. The statement attributed the increase to comparable store sales, sales from new stores and a partial offset by store closings. 

The company opened three new stores, two from their sale with Lowe's Foods, and debuted their new specialized 201Central stores.