NIWOT — Lucky’s Market — a Niwot-headquartered, Boulder-born natural-foods grocery chain that has rapidly expanded toward the East Coast in recent years — is closing dozens of its stores across the country, including locations in Longmont, south Boulder and Wheat Ridge.
The Lucky’s stores in Fort Collins and north Boulder will remain open.
Store employees confirmed to BizWest that the closures are expected to occur Feb. 12. The shuttering locations will hold liquidation sales over the next couple of weeks.
“There has been some recent news circulating about Lucky’s stores closing,” the company posted to its Longmont store Facebook page. “Unfortunately, our Longmont store will be closing and starting tomorrow, we will be offering significant discounts on all products in the store. We want to thank you for shopping with us. We’ve made some amazing friendships and together have supported some incredible community organizations.” A similar message was posted to the Wheat Ridge and south Boulder location pages.
Kroger, the Cincinnati-based parent of King Soopers and City Market stores in Colorado, invested an undisclosed sum in Lucky’s to form a “strategic partnership” with the local chain in 2016.
At the time, Kroger leaders said the Lucky’s investment was aimed at boosting Kroger’s “deep ongoing commitment to providing customers with affordable fresh organic and natural foods.” Lucky’s corporate motto is: “Organic for the 99%.”
Kroger CEO Rodney McMullen told analysts last month that based on the “amount of investment that it would take for Lucky’s to be a meaningful contributor to Kroger overall and the efforts that it would take, we just didn’t think it created a good return for the investments that we needed to be made relative to that.”
Lucky’s stores — generally about 35,000 square feet — are much smaller than many other Kroger-branded supermarkets, which can exceed 100,000 square feet.
“It’s hard to figure out that small-format model and to make it work effectively,” Gary Millerchip, Kroger’s senior vice president and chief financial officer, said during the December conference call.
The closure of Lucky’s stores represents a drastic reversal for the company.
Lucky’s opened seven stores last year, and company leaders told BizWest in September that expansion was expected to continue. Lucky’s website lists more than a dozen new Florida locations that were scheduled to open in 2020.
Tuesday’s closure announcements came after reports surfaced that Lucky’s has abandoned plans to build a new Denver store at The Boulevard at Lowry.
Neil Stern, a retail industry analyst and senior partner at Chicago-based consulting firm McMillanDoolittle LLP, told BizWest that he suspected Lucky’s would be forced to close stores after Kroger announced its retreat. But, Stern said, he is surprised by the magnitude of Lucky’s retrenchment.
“They opened too many stores, too fast, and in too many markets,” Stern said. “Obviously not all of those stores were working.”
When smaller chains abruptly stretch their geographical footprint from Colorado to Missouri to Florida in a short period of time “it becomes really challenging to efficiently run operations,” Stern said.
The eventual human-resources toll of the closures remains unclear, but reports suggest that as many as 2,500 jobs could be lost in Florida alone. Lucky’s employs about 650 people in Colorado.
Because Lucky’s is headquartered in Boulder County, the local impact could be particularly significant.
If a chain closes most of its retail locations, the firm “also has to rightsize the general administrative staff,” Stern said. “You need a lot fewer people in a headquarters to administer seven stores than you do for 40 stores.”
Media outlets have reported the upcoming closure of 32 of 39 Lucky’s locations. Locations identified thus far include:
Florida (All locations closing with the exception of Melbourne.)