Sale of Cub stores expected early next year, new owner says

The sale of Cub stores is likely to occur early next year.

Steve Spinner, CEO of United Natural Foods Inc., laid out a possible timeline for the sale during the company's earnings call last week.

UNFI bought Supervalu, including its Cub and Shoppers Food & Pharmacy stores, in 2018 for $2.9 billion. At the time, Spinner said that the company would sell the retail chains in a thoughtful and economically driven manner.

"We're working diligently to divest both Shoppers and Cub and have advisers fully engaged to push this forward who were working on several deals, each of which involves multiple stores, which increases the level of complexity," said Spinner during the call. "At Cub, we are also in a process and expect to have something to announce early in calendar year 2020 as well."

In 2018, Supervalu executive Anne Dament, who has since left the company, said UNFI hopes to find one buyer for the stores.

Forty-four Shoppers Food Warehouse stores in Maryland and Virginia are also expected to be sold in early 2020, according to the earnings call.

Cub has 80 stores in Minnesota and one in Illinois. Twenty-nine of the stores are franchised, which could be excluded from the sale. The rest of the stores are owned by UNFI.

Burt Flickinger of Strategic Research Group thinks the most logical suitor would be Meijer, the privately held, Michigan-based superstore chain.

"Both Meijer and Cub are unionized, so Meijer could potentially fold them into a bigger plan," he said.

Meijer last considered an entry into Minnesota in 2016 when it pulled out of a deal to build a 193,000-square-foot store in Lake Elmo. Cub stores, averaging more than 70,000 square feet, are considerably smaller.

Nonunion companies with employee stock ownership plans such as Hy-Vee, WinCo and Coborn's are less likely to buy the chain, Flickinger said.

Supermarket analyst David Livingston thinks the franchisees will cherry-pick the ones they want.

UNFI officials said they intend to maintain a supplier relationship with the Cub stores as part of the sale.