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Kroger adds more pharmacies with closing of Harris Teeter acquisition
January 29th, 2014
CINCINNATI and MATTHEWS, N.C. – Kroger Co. has boosted its pharmacy presence with the completion of its $2.5 billion deal to buy food and drug chain Harris Teeter Supermarkets Inc.
Kroger said Wednesday that the acquisition, announced in July, gives it 227 stores in "the fast-growing and attractive" Southeastern and Mid-Atlantic markets.
Harris Teeter's stores, which include about 150 pharmacies, are located in North Carolina, South Carolina, Virginia, Georgia, Tennessee, Maryland, Delaware, Florida and the District of Columbia.
Overall, Kroger will now operate 2,641 supermarkets, with 2,106 in-store pharmacies, across 34 states and the District of Columbia. The retailer's other store banners, which number about two dozen, include Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry's, Jay C, King Soopers, QFC, Ralphs and Smith's. The company also operates 786 convenience stores, 327 fine jewelry stores, 1,218 supermarket fuel centers and 38 food processing plants.
"We are pleased that our merger is complete and look forward to bringing together the best of Kroger and Harris Teeter to benefit our customers, associates and shareholders," Kroger chief executive officer W. Rodney McMullen said in a statement. "This merger brings the exceptional Harris Teeter brand and a complementary base of stores in attractive markets to the Kroger family. We have long respected Harris Teeter's customer orientation, friendly and professional associates, strong management team and company values."
Plans call for Harris Teeter to retain its store banner and operate as a Kroger Co. subsidiary, continuing to be based in Matthews, N.C., and led by current Harris Teeter president Fred Morganthall. The companies said there are no plans to close stores.
The addition of Harris Teeter will lift Kroger's annual revenue over the $100 billion mark. Harris Teeter had total sales of $4.7 billion for its 2013 fiscal year. Analysts estimate Kroger's overall sales for fiscal 2013, which ends next month, at more than $98.9 billion. That's up from Kroger's fiscal 2012 revenue of $96.8 billion, including about $8.2 billion in pharmacy sales.
With the closing of the acquisition, the companies also announced Wednesday that Harris Teeter chairman and CEO Thomas Dickson has retired.
"Tad has done an outstanding job as the CEO for the past 16 years," McMullen stated. "During his tenure as CEO, the management team of Harris Teeter has more than doubled the sales of the company and increased the operating profit fourfold by building over 100 new stores, expanding into new markets and improving the overall operating performance of the company. We look forward to working closely with the management team to continue to expand the Harris Teeter brand."
In addition, Harris Teeter executive vice president John Woodlief, who has served as chief financial officer since 1999, has resigned. Kroger and Harris Teeter reported that Woodlief previously was managing partner of the Carolinas offices of PricewaterhouseCoopers, Kroger's independent accountants, and independence rules prohibit him from serving in a financial role with Kroger. The retailers said he will pursue other interests and be available for consultation.
Dickson called Kroger "one of the best food retailers in the U.S." He added, "The merger with Kroger provides the opportunity to continue to expand the Harris Teeter brand as well as to provide future employment and career advancement opportunities for our associates in an increasingly competitive market."