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CINCINNATI -- The Kroger Co. here said yesterday it will unload 12 Cala Foods and Bell Markets stores in the San Francisco Bay area, in a bid to make its Ralphs Supermarkets division more profitable.
DeLano Retail Partners has agreed to purchase the 12 locations. The transaction is expected to close within 120 days. Kroger did not disclose the financial terms.
"The sale of these stores is a difficult, but necessary, step toward making Ralphs more competitive," said Dave Hirz, Ralphs president, in a statement. "We intend to work closely with DeLano Retail Partners to ensure a smooth transition for our customers and associates at these locations."
The move comes after months of rumors that Ralphs might exit the Northern California grocery market, so the announcement of the 12-store spinoff was not a big surprise.
In comments made during a retail seminar hosted by Lehman Brothers in New York, Kroger's vice chairman, Rodney McMullen, said his company reevaluates its assets on an annual basis to determine their value, and wouldn't rule out selling assets that are peripheral to the business.
"In Northern California, we saw that the value of our real estate and leases would be worth a lot more to somebody else," he said. "We do all our analyses based on cash flow."
Ralphs Grocery Co. was founded in 1873 and currently operates more than 450 conventional and warehouse-style supermarkets under the Ralphs and Food 4 Less banners in Southern California, Nevada, Illinois and Indiana; and Ralphs, Cala Foods, Bell Markets, and Foods Co in Northern California, from its headquarters in Los Angeles.