Aug. 30, 2007 — A Canada-based retailer, North West Co., plans to buy Cost-U-Less stores for $52.5 million.
In addition to stores on St. Thomas and St. Croix, the Cost-U-Less grocery chain has stores in nine other locations in the Caribbean, Hawaii, Guam, and California. A store in the Cayman Islands will open in the fall, and a lease was recently signed for the development of a store in Aruba.
Cost-U-Less has annual revenues of $225 million.
North West is a retailer of food and "everyday" products and services to rural communities and urban neighborhoods across Canada and Alaska. It operates 206 stores and has annual revenues of approximately $94 million.
The deal, approved by the boards of directors and trustees of both companies, is expected to close at the earliest by the end of October but definitely by Nov. 30.
"It's a bright new chapter," North West President and Chief Executive Officer Edward Kennedy said in a webcast on the company's website.
He did not return a phone call requesting more information.
Kennedy called the purchase of Cost-U-Less a strategic fit in the company's business of serving remote, non-conventional locations.
"We plan to continue Cost-U-Less' approach of tailoring each store's merchandise mix to local market needs," Kennedy said in a news release issued Tuesday.
He said in the webcast that store managers are responsible for selecting about 30 percent of the store's products to meet local needs.
Kennedy said North West had been looking to expand internationally. He said that with the benefit of North West's size, financial strength and deeper resources, Cost-U-Less represents a promising platform for expansion into three new international regions, with a focus on the South Pacific and the Caribbean.
Additionally, he said that Cost-U-Less' warehouse store knowledge adds a new dimension to North West's multi-store format approach.
"Overall, we see this transaction as one that strongly complements the core capabilities of each company while offering the opportunity to apply our specialized skills on a larger scale," Kennedy said.
Kennedy said that over the next five to seven years, the company expects to add new warehouse stores within Cost-U-Less' geographic regions and expand into other store types that build on Cost-U-Less' existing market presence and North West's strength as a "smaller box," multi-format retailer.
He said that simultaneously, Cost-U-Less' expertise in warehouse product size retailing will be applied to growing this business within the company's Alaskan and northern Canadian markets.
According to the company's website, North West's roots date to 1779 in Montreal.
Cost-U-Less started in 1989 with one store in Maui, Hawaii.
Jeffrey Meder, who heads Cost-U-Less, assured customers that a value-based shopping experience will continue under North West ownership.
"We expect our communities, employees and vendors will benefit long-term from the additional financial strength and retail capabilities of North West Co.," Meder said in a news release.
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