THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Tuesday, February 4, 1997 TAG: 9702040223
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: 85 lines
Michael E. Julian, who has fought to keep debt-heavy Farm Fresh competitive, announced Monday that he is leaving the Norfolk company to head a larger grocery chain based in Mississippi.
Ronald E. Johnson, who has a long history with Farm Fresh Inc. and who sits on its board, will replace Julian as president and chief executive officer. Most recently, Johnson helped turn around Florida grocer Kash n' Karry Food Stores.
Julian is the second high-ranking executive to leave Farm Fresh in less than a year. Keith Alessi, former vice chairman of the grocery chain, departed to head Jackson Hewitt Tax Service in Virginia Beach.
Several industry observers have speculated whether Farm Fresh's top managers are preparing for a possible sale of the chain, in which they would probably lose their jobs, anyway.
``I don't think they're related,'' said Alessi, who's still on Farm Fresh's directing board. ``I think mine was a personal decision, and I think Mike's was similar.''
Julian said in a statement Monday that the chance to head Jitney Jungle Stores of America Inc., a 105-store chain based in Jackson, Miss., was too good to pass up. The grocer had $1.2 billion in sales last year and is considered to be healthier.
Jitney Jungle is similar to Farm Fresh in that it has been loaded with debt from a leveraged buyout. But the chain plans to sell stock to the public soon to deal with its debt, according to published reports.
``The opportunity to run Jitney Jungle, a significantly larger company, was one that was too good to pass up,'' Julian said. ``Any reluctance that I had about leaving Farm Fresh Inc. was greatly reduced by the fact that Ron Johnson was available to assume my responsibilities.''
It's no secret that managing Farm Fresh is a difficult task. In a Jan. 19 story in The Virginian-Pilot, Alessi joked that his worst day at Jackson Hewitt didn't compare with a routine day at Farm Fresh.
Julian, who has been with Farm Fresh since 1987, has been dealing with more pressure from competitors at a time when the company's financial picture looks increasingly cloudy.
``Mike Julian is an extremely talented businessman,'' said Kenneth M. Gassman Jr., a retail analyst with Davenport & Co. of Virginia. ``I had someone tell me that if Julian had any money, he'd be dangerous. He just never had any money there at Farm Fresh.''
Farm Fresh carries a mountain of debt from its leveraged buyout in 1988. In the quarter ended Sept. 7, the company had $260 million in long-term debt, and its parent company, FF Holdings Inc., carried an additional load.
Two debt-rating agencies have noted that if the chain's situation does not change, it may not have enough cash to make timely interest payments on its debt.
In December, Farm Fresh hired a New York investment banking firm, Donaldson, Lufkin & Jenrette Securities Corp., to explore ``strategic alternatives.'' Julian has declined to elaborate on the company's prospects.
``The real question is: What happens to Farm Fresh?'' Gassman said. ``Where does Farm Fresh go from now.''
Gassman and other industry observers say a financial solution could include selling the entire chain, parceling off stores, restructuring the company's debt or finding new investors.
They have speculated that Hannaford Brothers, Harris Teeter or Winn-Dixie - grocers that have recently moved into the Hampton Roads market - might have discussed buying Farm Fresh.
Farm Fresh has 50 stores in Hampton Roads and the Shenandoah Valley area under the Farm Fresh and Rack & Sack banners.
Julian was at Jitney Jungle's headquarters in Mississippi on Monday and could not be reached for additional comment. A spokeswoman for Jitney Jungle said Monday afternoon she was unable to answer any questions on Julian's appointment.
Julian's replacement, Ronald Johnson, is no stranger to Farm Fresh. The executive, known in the industry as a pragmatic businessman, joined Farm Fresh almost a decade ago as a vice president.
Johnson had become executive vice president and chief operating officer of Farm Fresh before he left in January 1995 to become chief executive officer of Kash n' Karry Food Stores in Tampa, Fla.
Food Lion purchased Kash n' Karry in December, which left Johnson available for the Farm Fresh offer. Johnson could not be reached Monday. ILLUSTRATION: Color photo by Mark Mitchell/The Virginian-Pilot file
Michael Julian, above, is the second Farm Fresh executive to leave
the company in less than a year. Former vice chairman Keith Alessi
left to head Jackson-Hewitt Tax Service.
KEYWORDS: FARM FRESH