(April 12) Two potential sell-offs involving separate retail chains would, for one of the sellers, end a short dalliance in the grocery business and, for the other, help a parent company make long-sought progress in unloading an offshoot banner.

In the first scenario, Dallas-based investment group Lone Star Funds says it is selling its Bi-Lo stores after two years of ownership.

Lone Star bought the Mauldin, S.C.-based Bi-Lo and Birmingham, Ala.-based Bruno’s chains from Netherlands-based Ahold NV early in 2005 for $660 million.

Bi-Lo has 230 stores in North and South Carolina, Georgia and Tennessee.

Lone Star, which manages more than $13 billion in holdings in the U.S., Europe and Asia, said April 10 it had hired Merrill Lynch & Co. and William Blair & Co. as advisors in the planned sale.

Lone Star’s announced intention to unload Bi-Lo came as no surprise, said David Livingston, a retail consultant based in Milwaukee.

“They were bought by an investment group that wanted to see what they could do with them,” he said. “I don’t know what their strategic plan was. It obviously wasn’t to try to revitalize them or anything like that.”


Meanwhile, the sale of Detroit-area retailer Farmer Jack by the Montvale, N.J.-based Great Atlantic & Pacific Tea Co. (A&P) may be making some headway, Livingston said.

He said the Detroit chain may be sold to several buyers in pieces, adding that Minneapolis-based Nash-Finch Co. and Grand Rapids, Mich.-based Spartan Stores had submitted bids.

“They’re too low in volume, the rents are too high and they have union labor,” Livingston said of the problems A&P has had with Farmer Jack, which has 66 stores in the Detroit area. “Their market share has dwindled, so I have to think they’ll be piecemealed out at bargain-basement prices to anybody who wants to venture to take all that on.”

A&P has been trying to unload its Farmer Jack stores since 2003.

The stores aren’t valuable properties, in part because of unfavorable lease rates, Livingston said.