DATE: Tuesday, October 7, 1997              TAG: 9710070314

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY MEREDITH COHN, STAFF WRITER 

                                            LENGTH:   64 lines

FARM FRESH LEADER NAMED FORMER PRESIDENT OF FLORIDA-BASED KASH 'N KARRY TO FOCUS ON RENEWING MARKET DOMINATION

Ronald E. Dennis will become the next president of Farm Fresh Inc., once Richfood Holdings Inc.'s purchase of the Norfolk-based chain becomes final sometime in early 1998, Richfood announced Monday.

Dennis, most recently president of Tampa, Fla.-based Kash 'N Karry Supermarkets, a subsidiary of Food Lion Inc., began work Monday at Richfood and will focus on organization and planning during the transition.

Richfood, the biggest food distributor in the Mid-Atlantic with $3.4 billion in annual sales, announced plans to acquire Farm Fresh in September.

Farm Fresh has been losing market share in the growing and highly competitive regional grocery market and was looking for a strategy to reduce its debt or sell the company. Industry analysts, as well as officials at Richfood, expect the new president to boost the company's competitiveness and possibly return it to the No. 1 spot among grocery chains in Hampton Roads. It lost that long-held designation to Food Lion this year.

``Farm Fresh is positioned to remain a key player in the Tidewater market,'' said Kenneth M. Gassman Jr., a retail analyst at Davenport & Co.

``It's not healthy yet,'' he said. ``But the first couple of steps have been taken.''

Gassman said the first step was Richfood's acquisition of Farm Fresh, its third-largest wholesale food customer. Richfood will pay $220 million in cash and about $30 million in assumed leases for Farm Fresh. The deal also includes 1.5 million warrants, or rights, to purchase Richfood common stock at $25 within a five-year period. They will likely go to bondholders.

To deal with the company's millions of dollars in debt, Farm Fresh is expected shortly to file a prepackaged bankruptcy. If approved by a judge, that strategy would allow Richfood and its bondholders to agree on terms in advance. It also could shorten the time spent in bankruptcy to a matter of months - before the sale becomes final in early 1998. John E. Stokely, president and CEO of Richfood, said discussions have been ongoing about the details of the transaction.

One thing is sure: When Dennis takes the helm as president of Farm Fresh, he will have deep pockets to back him up. Richfood has cash and borrowing power, according to analysts. Richfood has already committed to spend at least $80 million to remodel older Farm Fresh supermarkets and plans to spend more to open new ones.

For his part, Dennis will bring extensive retail experience. Before his tenure as president of Kash 'N Karry, a 91-store chain, he spent the majority of his career at the Florida division of Albertson's Inc., a 98-store chain.

There he opened 39 new stores and developed sales and promotional programs. That's what Stokely said he'll expect from Dennis in Hampton Roads.

Customers can expect upgrades soon, Stokely said.

``This is a major investment for us, and we went looking for a seasoned veteran to lead,'' he said. ``Part of our strategy when we made the acquisition was to capture a larger market share and renovate as well as open new stores. Ron brings experience with both of those.''

Current Farm Fresh CEO Ronald Johnson plans to remain with Farm Fresh until the acquisition is complete. He said Monday that he has not yet met Dennis but expects big things from him.

Johnson also came to Farm Fresh from Kash 'N Karry. He plans to move to Jitney-Jungle Stores of America in Mississippi, following in the footsteps of another former Farm Fresh CEO, Michael E. Julian.

``That's all just a coincidence,'' Johnson said with a chuckle. ``And I expect Ron Dennis is at Farm Fresh for the long term.''

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