NEW YORK – Ross Stores Inc. has agreed to acquire 46 store sites in California, Florida, Texas, Arizona, Colorado and Oklahoma from Albertsons LLC. Terms weren’t disclosed.
The acquisition of the properties, to be converted into Ross and dd’s Discounts units, will expand Ross’s unit growth to between 11% and 12% in the fiscal year ending in February 2008.
Ross will take control of some sites as early as November and expects to begin reopening stores as early as next March. Capital expenditures for conversion are projected to range between $1.5 million and $2 million per store, increasing cash requirements for the current fiscal year by as much as $10 million.
Ross estimate the effect on earnings per share would be “relatively neutral in the current year and slightly accretive in fiscal 2007.”
Michael Balmuth, vice chairman, president and chief executive officer, commented, “We are excited about this unique real estate opportunity, which gives Ross the ability to acquire a substantial number of store sites in several of our established, top performing markets. Availability of quality retail locations is generally limited in these more established areas. As a result, we believe this transaction offers a rare chance to enhance our long-term growth prospects and returns by adding these stores, almost all in our highly productive, core Sunbelt states.”
The purchase is an outgrowth of the January 2006 deal in which Supervalu, CVS and an investment group led by Cerberus Capital Management acquired Albertsons for more than $17 billion in cash, stock and debt and began to divide the firm’s assets. The stores which Ross has agreed to buy were acquired by the Cerberus group, which picked up 655 locations in the Sunbelt states cited by Ross in addition to Louisiana.
Headquartered in Pleasonton, Calif., Ross is the second largest operator of off-price apparel retailers, behind The TJX Companies, and operates 766 Ross units in 27 states and Guam as well as 26 dd’s Discounts locations in California. Fiscal 2005 revenues came in at $4.9 billion.