Struggling Fairway Looking To Sell Hunts Point Warehouse
After a quick turn in Chapter 11 bankruptcy last year, the struggling grocer reached out for a restructuring expert and is now looking to sell its enormous Bronx warehouse.
Owned by Blackstone Group’s GSO Capital Partners, Fairway has been unable to jump-start the business since its July bankruptcy exit — in part due to the increasingly competitive environment from rivals like Amazon, FreshDirect, Trader Joe’s and Whole Foods.
The retailer will face a cash crunch later this year and is looking to trim bloated operational costs, according to industry experts familiar with the situation.
Traditional grocers like Fairway — founded more than 80 years ago by the Glickberg family — have been dropping like flies even as some newer rivals, including Whole Foods, are on the ropes as well.
Whole Foods just announced that it would close nine stores across the country as it reported its sixth consecutive quarter of same-store sales declines.
Sterling Investment Partners took Fairway public in 2013, but the company has posted losses every quarter since its IPO.
Sterling had envisioned a 300-store behemoth and built out a $20 million distribution and manufacturing facility in Bronx in 2015 to help supply a chain much larger than the current 15 stores operating in the New York metro area.
The problem is Fairway has had only struggles since scrapping all expansion plans. Now it wants to leave its Hunts Point facility, according to sources.
The restructuring firm, AlixPartners, which has completed its work, was brought in to help it reduce expenses, including shedding the Bronx facility, where it has a bakery and kitchen for the prepared food items in its stores.
Although Fairway just opened a store in January in Brooklyn, there are no further expansion plans, sources said.
“Any suggestion that we are seeking to sell the Fairway business is incorrect. We are committed to seeing Fairway through this turnaround period and growing the business,” said Paula Chirhart, a senior vice president of Blackstone.