The Monclova Township company said it would end its money-losing retail business between April and June. The retail unit was begun in 1952 by the agribusiness that has $4.2 billion in revenue. But the stores pulled in just $140 million of that in 2015.
The company plans to liquidate its merchandise in the spring and sell the stores. It is unclear how the liquidation will take place. The shutdown does not affect the grain, ethanol, rail, or plant nutrient parts of The Andersons.
Store employees were told of the news at mandatory meetings Sunday and promised severance packages and help with job hunting. At the Talmadge Road store, employees leaving the meeting looked glum, with most grasping a leaflet explaining the situation.
A company official asked that the employees be left alone to process the situation. “This is the worst day,” a human resources official said.
“The decision to close The Andersons stores was not easy for anyone involved,” company Chief Executive Officer Pat Bowe said on Sunday.
“We’ve had a long run in this business and had fantastic employees who really worked hard for generations servicing our customers not only here in the Toledo marketplace, but Columbus. And we’re very grateful for their long service,” Mr. Bowe said at the company’s retail offices on Conant Street in Maumee. “It makes it a very difficult day for everyone that’s involved.”
Mr. Bowe, who became CEO in 2015 and was the first non-Anderson family member to run the company, told The Blade in June that the stores were part of the community legacy and he didn’t foresee closing them.
Mike Anderson, the company’s chairman and grandson of its founder, said on Sunday, “The really rough thing is the communications that have taken place … in all of our stores, telling a little over 1,000 people that we weren’t good enough to continue offering them a job.”
The company considered selling the stores, but in its analysis, no suitable buyer could be identified, the executives said.
The closings are a monumental psychological blow to the Toledo area, as they were the most visible aspect in the community and the most widely known part of the community to anyone but farmers. The Toledo retail icon has operated general stores for seven decades that offered shoppers a quirky mix of everything from drywall to produce to fine wines.
But to financially savvy observers, the closings likely are not surprising.
The retail group within The Andersons typically broke even or lost money for years.
Mr. Bowe said the retail group lost more than $20 million the last eight years. The division has not made an annual profit since 2008. The latest annual revenue for the retail group was $140 million in 2015, which is a small segment of the company that pulled in $4.2 billion in revenues that year.
Vote on Friday
At its meeting Friday, board members of The Andersons voted to cease retail operations, Mr. Anderson said, but executives have wrestled with closing the stores for several years and came close to pulling the plug earlier.
“A few years ago we put quite a bit of money back in the stores and we got a little bit of a lift, but it didn’t last,” he explained. “So well before Pat got here there was the real risk that we just didn’t have the value equation that was going to allow us to continue against the continued saturation of brick and mortar stores and the significant increase in Internet shopping. And it came to a head in the last couple of months.”
Mr. Bowe said retail sales this holiday season were below the previous year’s. This month, he said, the company had to either close the stores or order merchandise for the upcoming season.
Despite the financial performance of the stores, the company did not seriously think about closing all stores until November when it shut the smaller Sylvania Marketplace store, Mr. Bowe said.
The company considered the retail unit to be interconnected with its other units of grain, rail car, ethanol, and plant nutrients, the CEO said last summer.
“This has been and is an important part of our portfolio and an important part of our brand,” Mr. Anderson said Sunday. “If we saw a path forward that would take us in an improvement direction and reverse the macro sales trends, we’d still be in the business.”
The stores have been marketed by a slogan of “A store like no other!” because they carry more than 100,000 items, including traditional groceries; specialty wine and beer; fresh fruits, vegetables, and meats; clothing; tools and hardware items; lawn and garden equipment; fertilizer; plants; automotive supplies; household items such as furniture, towels, lighting; and pets and pet supplies.
Another draw were the stores within the stores, with spots in the Toledo-area locations for a House of Meats counter and a Tony Packo’s restaurant.
The company said there are about 650 employees affected in the Toledo area and 400 in Columbus. Besides the stores, the retail division includes a 245,000-square food distribution center in Maumee.
Since last fall, there have been indications that the stores were doomed.
The Andersons opened its $54 million headquarters in Monclova Township in October and then a week later announced it was pulling the plug on the Sylvania Marketplace store and eliminating 96 jobs.
The retail group’s financial performance has not improved in the past few years. In the company’s most recent quarterly financial filing in November with the U.S. Securities and Exchange Commission, it had a pretax loss of $1.6 million. The unit had a pretax loss of $2.6 million for the first nine months of 2016, and is expected to finish with an annual loss once those figures are reported in early February.
Mr. Bowe gave no indication to The Blade last summer about the upcoming fate of the stores, but said he recognized their importance locally.
“Most people think The Andersons are the stores,” he said in June. “They don’t even look up and see that big grain elevator with the sign on it. They kind of just look at the stores,” he added.
The Andersons said it had not yet determined the full financial impact of the closings, but would have an impairment charge of $6.5 million in the fourth quarter of 2016 when its quarterly and 2016 annual earnings are reported next month. It expects to take a charge of $9 million to $14 million in the first half of this year for severance and other costs associated with the closings.
Began in 1952
The retail division began in 1952, five years after the agribusiness began. Adding to stress on the company was the first financial loss for a year suffered by The Andersons in 2015 since it began selling public stock in 1996.
About three-fourths of the company’s stock, which is traded on the Nasdaq market, is owned by institutional investors or mutual funds. One such investor, HC2 Holdings Inc., suggested last year that it wanted to buy parts of the Toledo-area business, but it would sell off the stores. Institutional shareholder pressure has prompted similar moves by other companies.
But Mr. Bowe said there was not undue pressure from Wall Street or the HC2 situation to get rid of the stores.
“This has been going on for many years. I knew the challenges of the retail stores when I interviewed for the [CEO] job,” he said.
Local retail experts said the company’s Talmadge Road store in Toledo will be in high demand. Its Maumee location on Illinois Avenue may prove harder to dispose of. The fate of its Columbus stores was unclear. Each store has about 160,000 square feet.
Local commercial real estate retail specialists said, as assets, the Talmadge Road has the most value with its location next to Franklin Park Mall.
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