DATE: Sunday, April 27, 1997                TAG: 9704260544

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

TYPE: Q&A 

                                            LENGTH:   88 lines

NO "GLOOM-AND-DOOM SCENE" AT FARM FRESH GROCER'S NEW CEO SPEAKS OUT

Ronald Johnson took on Kash n' Karry Food Stores, a troubled Florida grocer trying to climb out of bankruptcy, in 1995. In less than two years, the chain had been improved and sold to Food Lion.

The new chief executive officer of Farm Fresh Inc. faces a similar challenge in Hampton Roads - this time with a company that has a more formidable pile of debt, which has deterred several potential buyers and investors.

Running the Norfolk-based supermarket chain has frustrated past leaders. Because of hefty interest payments, executives have had to limit growth and find creative ways to build the company's sales. And the grocer's situation regularly sparks speculation within the financial community.

Last December, Farm Fresh hired an investment banking firm to consider ``financial alternatives.'' That could include just about anything: major investment, buyout, bankruptcy or other solutions, company officials said.

In the meantime, Johnson says he's concerned with the way Farm Fresh has been presented in the media. He worries how speculation might affect employees and stores.

``It's not a gloom-and-doom scene here,'' he said. ``There will be a solution. And Farm Fresh will continue to be a company.''

In an interview last week, Farm Fresh's new chief executive officer spoke to staff writer Stephanie Stoughton about the company's current situation and how it may change.

What are Farm Fresh's financial alternatives?

Right now, what we are doing is an excruciating analysis of our alternatives. We don't have the data right now to truly make the right recommendations.

Is there a deciding date? Next April, when the parent company has to pay more cash on its debt, has been mentioned as a possible date. Will it be before then?

We do know that by April 1998, we'd like to have an answer. (However, Johnson and Chief Financial Officer Rick Coleman added that the grocer doesn't necessarily need a major solution by April 1, 1998. The grocer may do something in the short term.)

There's nothing in the immediate future. The real focus is running the business as successfully as possible while we're working on finding a solution for the balance sheet.

How much control do you have over Farm Fresh's long-term future?

I'm a member of the board directors and have been for a while. The future lies with management and the board, representing the shareholders.

In a buyout or any other resolution, will Farm Fresh's employees keep their jobs?

There should not be any concern for their futures. No one is going to lose their jobs in this process.

Previous executives have been frustrated by the company's situation - the rumors, the analysts calling, and us, the reporters. Are you there yet?

I'm not frustrated. I think Rick (Coleman) and I have a lot of experience in dealing with this - the analysts, the associates, the whole process.

Has the situation here been more difficult than the one at Kash n' Karry?

The real beauty of this is that the operations of this place are very strong. . . . It's an easier situation.

How is 3 Stores, 1 Roof (the new grocery superstore in Chesapeake) doing?

It's doing just fine. It's doing exactly the way it was projected to do.

There have been so many entries into the Hampton Roads market over the last two years - Harris Teeter, Hannaford, Wal-Mart superstores, Super Kmart and so on. Do you think everyone will survive?

The market here is no different than in other places. . . . The question is, does Hampton Roads need another 500,000 square feet of supermarket space? No. But does someone believe it's their right to come in? Sure.

Will Farm Fresh be affected?

It's not a major impact on this market. We've been here 51 years, and we have the primary locations. And we're not giving them up.

If Farm Fresh manages to get rid of its debt and be able to invest more money in this market, do you think it would be a more formidable presence in Hampton Roads?

That would be an understatement. ILLUSTRATION: Color photo

Ronald Johnson

Send Suggestions or Comments to webmaster@scholar.lib.vt.edu