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Market Basket deals with turmoil as Biddeford store prepares to open

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Posted: Wednesday, July 17, 2013 11:27 am | Updated: 7:07 pm, Mon Jan 6, 2014.

BIDDEFORD – As area residents and city leaders eagerly anticipate the opening of Maine’s first Market Basket in Biddeford later this summer, a possible shakeup in the company’s corporate leadership could affect the opening or operation of the local store.

A story in Tuesday’s The Griffin Report of Food Marketing, a food trade publication, confirmed that the board of directors for Market Basket is set to met on Thursday, July 18, and vote on the ouster of Arthur T. Demoulas, the chain’s chief executive officer, who has been leading the company for the past five years.

To stop that from happening, Market Basket employees and customers are signing on in droves to a petition asking the board not to fire Arthur T. Demoulas in favor of his cousin, Arthur S. Demoulas.

Many employees, and others, are also posting messages of support for Arthur T. Demoulas on a Facebook page, called “Save Market Basket,” which as of Tuesday afternoon had more than 11,300 “likes” and climbing.

According to Kevin Griffin, president of the Griffin Report, Market Basket is a family owned and operated grocery chain founded in 1963, which has “long (been) considered one of the most successful regional grocery store chains in America.”

The company now has about 25,000 employees and more than 70 supermarkets, which are located throughout Massachusetts and New Hampshire. However, part of the dispute between the Demoulas cousins seems to be over the rapid expansion of the company, including its first reach into Maine.

According to the story in the Boston Globe, on July 12, during Arthur T. Demoulas’ five-year tenure as the CEO of Market Basket, the chain has opened 12 new stores and renovated another 11. In addition, in 2012 the company recorded a net income of $217 million.

Last fall, Mike Berger, a senior editor at The Griffin Report told the Sun Chronicle that Market Basket, which is known for its deeply discounted prices, has been “in expansion mode lately,” which was why he wasn’t surprised to hear the company was looking to open its first store in Maine.

“It’s been big in Massachusetts and New Hampshire for a long time and they’re looking for market-share expansion,” Berger said at the time. “It’s likely the success they’ve had in New Hampshire led to their wanting to come to Maine.”

According to the Boston Globe, Market Basket, which is formally known as Demoulas Super Markets Inc., has nine shareholders, all members of the family.

A family dispute – another in a long-running saga of family disputes centered on the company and its leadership – led to Thursday’s board of directors meeting, which is being held under a court order, according to the Boston Globe.

“The short version of the story goes like this,” Griffin said. “Arthur S. Demoulas, who holds a less than 1 percent controlling interest in the family business, is attempting to have his cousin, Arthur T. Demoulas, removed as head of the company. Arthur S. is leading the charge to have the business assume new debt to the tune of $1.5 billion so the shareholders can ‘recapitalize’ the business.”

A spokesman for Market Basket did not return a call seeking comment about the upcoming board of director’s meeting or its possible impact on the new Biddeford store, before the Sun Chronicle’s print deadline Tuesday.

However, Daniel Stevenson, Biddeford’s economic development director, said on Tuesday that he did not believe the outcome of Thursday’s vote would affect the plans to open the Market Basket locally. Stevenson also said that, as far as he knows, the store, located at the former Lowe’s at the Shops at Biddeford Crossing off Route 111, is on track to open in about six weeks.

Griffin said Tuesday that, “Arthur T. Demoulas (the company’s largest shareholder) has been running the company (like a champion, in my opinion) for years now, and has been delivering consistent unprecedented growth, and stellar profit margins by any measure. It is astounding that the board would want to remove Arthur T. from a job that he does so well.”

Griffin also had a chance to speak with Arthur T. Demoulas during this past weekend to talk about his possible ouster and Demoulas told him: “I have always said that at Market Basket we are in the people business first and the food business second. Our philosophy is to treat our people with respect and share the success with them.”

In addition, he told Griffin that the direction the new board of directors seems to be headed in “taking on major debt, raising prices and slowing capital expenditures, will undo the model that has made Market Basket extraordinarily successful.”

He also told Griffin he’s concerned that the new board of directors is failing in its job of keeping family disputes away from business operations.

“They have a fiduciary responsibility to the company, its employees and the communities we serve, not just the shareholders,” Arthur T. Demoulas said.

In Griffin’s opinion, “Arthur T. Demoulas is on the firing line for sharing the wealth.”

That’s the same message shared by Tom Dumais, the assistant store manager for the Market Basket in Rochester, N.H.

He told the Sun Chronicle Tuesday that all the employees “are concerned about the future of this company. Arthur T. (Demoulas) has steered us in a good direction. He always takes care of his employees and the customers.”

Dumais said that his leadership, Market Basket has been “very generous with profit sharing, bonuses and good pay” for everyone from management on down.

He’s worked for Market Basket for the past 26 years and climbed the ladder to a job in management from his start as a bagger. It’s his fear that the board of directors and Arthur S. Demoulas “want to slow the growth of the company.”

Dumais said all of the employees and many customers at the Rochester store have signed the petition asking the board of directors to keep Arthur T. Demoulas

“We are hoping to persuade the board to keep him in charge,” he said.

The online petition, which can be found at www.savemarketbasket.com, is addressed to the three non-family members on the board of directors and reads in part:

“We implore you to please consider all that Market Basket means to the people who shop there, work there and understand it to be more than just a business . . . Please consider the ramifications to so many people if you vote to oust the current CEO, Arthur T. Demoulas. We will be the victims (and will) lose the wonderful, independent business at which generations of our families have shopped and worked. Market Basket has always had our backs when it comes to prices and employment. Now we have theirs.”

The “Save Market Basket” Facebook page said one reason the new board of directors seems to be seeking to oust Arthur T. is because of “reckless spending and use of company profits.”

But the page argues, “there is nothing reckless in offering great values to customers (and) taking good care of associates and vendors. There is nothing reckless in making a 5 percent profit for shareholders in an industry that averages 1.5 percent.”

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