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Publix breaks ground, downplaying idea of buying Harris Teeter

Florida-based Publix broke ground Thursday in Ballantyne on its first North Carolina store, as rival Harris Teeter remained silent on whether it will sell itself to another company.

Harris Teeter said six weeks ago that it has hired J.P. Morgan to look into selling the grocer. Matthews-based Harris Teeter said it had been approached by two private equity firms interested in buying the company.

But rumors have swirled that a rival grocer such as Publix or Giant’s parent company Royal Ahold could be interested in purchasing Harris Teeter. On Thursday, Publix executives played down the possibility of buying Harris Teeter’s 211 stores. It would be the largest purchase ever for the privately-held grocer, which has grown to 1,070 stores, mostly without acquisitions.

And though Publix is substantially larger than Harris Teeter, with $27.5 billion worth of sales in 2012 compared with $4.3 billion, such an acquisition would be a departure for the company.

Publix President Todd Jones, on hand for the ceremonial dirt-turning, emphasized the company’s promote-from-within culture. He said many top executives at Publix have been there since they were teenagers.

“When you acquire, you can’t do that,” Jones said. He said the company hasn’t made a large purchase of a competitor since it bought a meatpacking company the 1930s. Publix stock is all held by employees.

Jones said Publix will compete for Harris Teeter’s customers.

“Harris Teeter is a great store. They do a great job taking care of customers,” he said. “We think we can do the same.”

Harris Teeter declined to comment. A company spokeswoman referred questions to the company’s earlier statement in February.

Publix’s Ballantyne location, on Providence Road West, is expected to open in early 2014. The company has also announced plans to build a store in South End, at South Boulevard and Iverson Way.

The two stores, in prominent locations near multiple Harris Teeters, suggest Publix is serious about expanding into Charlotte. The company is opening a Charlotte office, with a divisional vice president who will oversee new store openings in North Carolina.

“We’re always looking for good sites,” Jones said. The site, which has a Walgreens standing on the corner, is being developed into Ballantyne Town Center, a grocery-anchored shopping center. Florida-based Stiles has formed a joint venture with Levine Properties to develop projects locally. Records show the developers purchased the Ballantyne Publix land in November from the Harris Land Co. for $4 million.

Publix executives said North Carolina was the state where they’ve received the most consumer requests for expansion. They’ve considered pushing into the state for years, but have focused on growth in contiguous markets.

Charlotte City Council at-large member David Howard said at the groundbreaking that he’s familiar with Publix from time he spent in Atlanta, and is glad they’re opening in Charlotte.

“I’m looking forward to wings from the deli,” he said.

Publix is the latest new entrant to the Charlotte grocery market, which has become increasingly crowded in the past several years, at both the high-end and low-price segments. Whole Foods and Walmart Neighborhood Market have opened in Charlotte. Target and Family Dollar renovated their stores to sharply increase their food offerings.

Harris Teeter itself is pouring millions of dollars into upgrading some of its flagship stores in Charlotte, including its store on Central Avenue and at the intersection of Providence and Queens roads. The company also launched two new, upscale concept stores, 201central, in the University City area of Charlotte and Wesley Chapel, and bought Lowes Foods’ local stores to beef up its position in Charlotte.

Publix reported this month that its fourth-quarter sales topped $7 billion, down from $7.2 billion last year. The company attributed the drop to an extra week in the calendar in the 2011 fiscal year. Sales at stores open a year or more, considered a key indicator of a retailer’s health, were up 1.2 percent, and the company had $393 million worth of profits.

Harris Teeter reported earnings for its most recent quarter at the end of January. The company’s sales rose 3.7 percent, to nearly $1.2 billion, and sales at stores open a year or more were up 2.5 percent. Harris Teeter had $22.8 million worth of profits.

The company’s stock is up more than 8 percent since the possible sale was disclosed in February. Shares of Harris Teeter closed down less than 1 percent on Thursday, at $42.71.

Portillo: 704-358-5041 On Twitter @ESPortillo
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