BI-LO to Spin Off Burno's Stores in Alabama.

A STORY IN THE BIRMINGHAM NEWS TODAY reports that BI-LO stores located in Maulden SC will spin off it's Bruno's stores.

The headquarters for Bruno's Supermarkets will return to Birmingham as part of the owner's restructuring plan that also splits the grocery chain from its South Carolina-based parent company.

Lone Star Funds today announced that BI-LO will no longer own Bruno's. Lone Star will spin off Bruno's and operate it as a separate corporate entity.

The reorganization is designed to allow both supermarket chains to "invest in their future success and align resources to serve the specific needs of BI-LO customers and Bruno's customers," a prepared statement said.

In addition, seven unprofitable Food World and Food Max stores will close April 7, the statement said.

Bruno's will operate 67 stores in Alabama and Florida. Bi-Lo, based in Mauldin, S.C., operates more than 230 stores across a four-state area.

"This reorganization will allow both supermarket chains to build on their strong brand reputations. Both have strong store management teams, strategic store locations in one of the country's fastest growing regions and both enjoy a long tradition of customer and community service," said Len Allen, president of Lone Star U.S.

"BI-LO will work with Bruno's to ensure a smooth transition through the reorganization process," added Brian Hotarek, BI-LO's president and CEO.

Founded by Joe Bruno as a family store 75 years ago, Bruno's Supermarkets operates 23 stores under the Bruno's banner, 42 Food Worlds and two Food Max stores. The spin off gives Bruno's the opportunity to focus on enhancing its brands and strengthening its connection to the communities it serves, Lone Star said.

Bruno's employs approximately 5,180 people.

Dallas-based Lone Star bought Bruno's and Bi-Lo in December 2004

My Thoughts: This will be an interesting move. More interesting is that the new president of Bruno's is an investment banker from Lone Star. Currently the merchandising staff that manages Southern Family Markets operates out of the same corporate office that the new Bruno's stand alone company will operate from which makes one wonder what will happen there. More to the point here, one has to ask if Lone Star will make the appropriate investment into Bruno's to make it a viable competitor in the eyes of consumers. It's one thing to invest capital in remodels, it is another to invest the appropriate labor and consumer based programs designed to add value to the shopping experience. Time will tell on this front.

What do you think?