Giant opens six stores in four states

Giant Food Stores announced last month that it opened six new stores in four states. Five of the stores were Shop n' Save stores that Giant converted to Martin's Food Markets, and one was a newly constructed Giant to replace a closed store nearby.

Giant acquired the Shop n' Save locations from Supervalu last November and received approval to close the deal from the FTC in February. The stores are in Pennsylvania, Maryland, Virginia, and West Virginia (2). The Giant location is in Warrington, PA.

Giant, a wholly-owned subsidiary of Ahold Delhaize USA, now operates 178 supermarkets in Pennsylvania, Maryland, Virginia and West Virginia.

The company recently opened its first Giant Heirloom Market in Philadelphia, and has plans to open three more of the urban-format grocery stores in Philadelphia this year.

United Natural Foods to acquire Supervalu

United Natural Foods announced that it plans to acquire Supervalu for $2.9 billion in cash. According to Supermarket News, the deal would create a large, diverse food distributor serving traditional grocery stores via Supervalu, and natural/organic product retailers though United Natural Foods, whose primary customer is Whole Foods.

The acquisition is expected to result in Supervalu's exit from the grocery retail business. Supervalu operates 114 supermarkets under the Cub Foods, Hornbacher's and Shoppers banners. Save-A-Lot had been owned by Supervalu until 2016 when it was acquired by Onex Corporation.

In recent years Supervalu has struggled to compete with larger grocery companies and online food retailers, and as a result has stepped up its wholesale operations. Wholesaling now accounts for 78% of total sales, up from about 44% two years ago. The company's wholesale arm serves a network of 3,437 stores.

The deal is expected to close in the fourth quarter of this year.

Albertsons in talks to acquire Sprouts

It was reported last week that Albertsons is considering a deal to acquire Sprouts Farmers Markets, and an industry source told me that he thought the likelihood of such a deal was 50-50.

Sprouts, based in Phoenix, is the largest farmers' market-style food retailer in the country. It operates more than 250 stores in 15 states, not including Pennsylvania, where a Philadelphia store is planned. There are no stores currently in New Jersey either, and it has been rumored that the company is looking for a site in South Jersey.

According to reports, Sprouts has plans to open 32 stores this year, following 36 new stores last year and 27 in 2015.

Jefferies Anlyst Chris Mandeville said last week that "the logic of a deal makes sense in our view," but added that it would be very expensive.

Albertsons, which is owned by Cerberus Capital, acquired Safeway and Supervalu in recent years. Reports said that the company was in talks to acquire Price Chopper late last year, but the deal never happened.

Save-A-Lot closing west coast stores

Save-A-Lot, under the ownership and guidance of private equity firm Onex since last fall, announced earlier this month that it would close all 13 of its existing stores in California and Nevada, as well as the distribution center servicing them.

Supervalu, the discount grocer's previous owner, saw the west coast as a great opportunity, but current CEO Eric Claus told Supermarket News that the investment required to build brand equity and store density would be better deployed on initiatives where the chain was better established.

Save-A-Lot currently has about 1,400 stores from Colorado and states to the east.

The 13 stores are expected to close in a matter of weeks.

Private equity firm to buy Save-A-Lot for $1.365 billion

Supervalu announced yesterday that it has entered into an agreement with private equity firm Onex Corp. to sell Save-A-Lot for $1.365 billion. The deal is expected to close by January 31, 2017.

Supervalu and Onex also announced that they have entered into a five-year agreement where Supervalu would continue to provide support for Save-A-Lot, including merchandising technology, payroll, finance and other functions.

Analysts had predicted the sale price would be higher.

Company officials said that Save-A-Lot's results had suffered recently as a result of reduced SNAP benefits and product price deflation. The discount grocery chain currently accounts for about a third of Supervalu's business.

Supervalu said yesterday that proceeds from the deal would be used to reduce debt and improve its capital structure, and to fund operations and growth. The sale is another major step in the company's transformation into a wholesale-focused company.

Canadian private equity firm said to be leading bidder for Save-A-Lot

On Friday published reports indicated that Onex, a Toronto-based private equity firm, is the leading bidder to purchase Save-A-Lot from Supervalu. An auction is underway to find a buyer. Prior to the auction, Supervalu had planned to spin off the discount grocer into a publicly traded company controlled by Supervalu shareholders.

Fresh Market delays openings, names Supervalu as supplier

The Fresh Market confirmed earlier this summer that it has re-evaluated certain store openings as it takes time to develop its long-term growth strategy. The stores whose opening dates have been delayed include York, PA and three others in FL, VA and MO.

The store under construction in Blue Bell, PA was not listed and will presumably open as scheduled, although I'm sure The Fresh Market didn't expect McCaffrey's to open across the street when they signed their lease.

During an earnings conference call last November, The Fresh Market CEO Rick Anicetti said the company needed to comprehensively reassess the chain's value proposition due to an influx of competition and a slowdown in sales and profitability. After the company was sold to Apollo Global Capital earlier this year, The Fresh Market announced 13 store closures.

In related news, The Fresh Market announced earlier this month that it had reached a long-term supply agreement with Supervalu to serve as the grocer's wholesaler and distributor. According to a report in Supermarket News, the deal calls for Supervalu to supply The Fresh Market with traditional and signature grocery products across a range of categories. Once The Fresh Market's existing supply contracts expire, Supervalu will become the chain's primary wholesaler.

Private equity firms reportly planning to bid on Save-A-Lot

A recent Reuters report stated that several private equity firms plan to bid on Save-A-Lot, currently a Supervalu banner, in the coming weeks. If the report is accurate, it is not likely that the discount grocer would be spun off as a public entity, as many thought it would.

Reuters' anonymous sources named Advent International; KKR; Clayton, Dubilier & Rice; TPG Capital; Onex Corp., and Thomas H. Lee Partners as potential bidders that could go as high as $1.8 billion.

Ahold-Delhaize trading as one entity, selling off stores to avoid antitrust concerns

Ahold-Delhaize began trading as a combined entity on Monday, July 25, a few days after the Federal Trade Commission issued a consent order allowing for the completion of the merger, subject to the sale of 81 stores due to antitrust concerns.

According to the company, agreements have been made to sell all 81 stores, plus an additional five stores that were included as part of negotiations with buyers in order to reach a package deal. Buyers include Weis Markets (38 Food Lion stores in Delaware, Maryland and Virginia), Supervalu (22 Food Lion stores in Maryland, Pennsylvania, Virginia and West Virginia), and Publix (10 Martin's stores in Richmond, Virginia), among others.

The FTC said the agreement is subject to public comment until August 22, after which the commission will decide whether to make the proposed consent order final.

Save-A-Lot planning six new PA/NJ stores

It was reported last month that Save-A-Lot, the discount grocer that Supervalu is looking to spin off, plans to open six new stores in Pennsylvania and New Jersey. Two of these stores will open soon in Philadelphia, and one in Norristown, PA. The other locations are planned for Lebanon, PA, Pottstown, PA and Trenton, NJ.

Save-A-Lot files IPO, to spin off from Supervalu

Supervalu announced earlier this month that its discount grocer Save-A-Lot filed an IPO and plans to spin off into a publicly traded company to be largely controlled by Supervalu shareholders.

According to Supervalu CEO Sam Duncan, after the separation "Supervalu will be able to focus on providing wholesale distribution services to independent retail customers and operating its five regionally based traditional format grocery banners. Save-A-Lot will continue to be a leader in hard discount grocery retailing in the United States."

According to the prospectus, Save-A-Lot would trade on the New York Stock Exchange. The prospectus also said that Save-A-Lot plans to open about 90 stores per year in 2016 and 2017, and to maintain mid-to-high single digit rates of annual new store growth in future years.

According to Save-A-Lot, the limited assortment grocery channel represents approximately 3 percent of the overall U.S. market and is projected for growth of 8 percent over the next five years.

Supervalu to decide whether to sell or spin Save-A-Lot

Supervalu announced last month that it is preparing to explore an outright sale of the Save-A-Lot discount grocery chain, rather than spin it off as a separate unit. According to published reports, the company has received interest from several private equity firms, and has told them it will consider offers in early 2016. Waiting until 2016, when Supervalu plans to register with regulators to enable Save-A-Lot to "spin-off" as its own company, provides Supervalu with flexibility as it weighs its options.

A possible spin-off had been announced in July in order to insulate the fast-growing Save-A-Lot chain from its parent company's slower-growing wholesale and food retail business.

Buyout firms have to convince Supervalu that a sale would represent a better value to the company and its shareholders than a spin. Industry experts value Save-A-Lot at about $1.7 billion.

Save-A-Lot currently has 1,334 stores, about 70 percent of which are operated by licensees.

Albertsons files for IPO

Earlier this month, Albertsons, the second-largest traditional supermarket operator in the United States (behind Kroger), filed for an initial public offering. The IPO, which comes only a couple years after an investor group led by Cerberus Capital Management purchased the company from Supervalu, is expected to raise about $100 million.

Albertsons said it plans to use the money to pay down debt and fund other corporate initiatives.

Albertsons currently operates over 2,200 grocery stores in 33 states under banners that include Albertsons, Acme, Safeway, Vons, Jewel-Osco and others.

Save-A-Lot planning for corporate store growth

In a May conference call with analysts, Supervalu President and CEO Sam Duncan said the company's goal is to open up to 100 new Save-A-Lot locations this year, including about 60 corporate stores. Beginning in 2018, Duncan projects 150 Save-A-Lot openings per year and anticipates the same 60-40 corporate - licensee mix.

"Supervalu wants to be in control of the Save-A-Lot store openings," according to Chuck Cerankosky, an analyst at Northcoast Research in Cleveland. "They are making sure the customer walks into a well-stocked, clean store that features a more appealing fresh-product assortment than it might have two or three years ago."

Save-A-Lot stores are typically about 16,000 SF, or about one third the size (or even less) of a traditional supermarket.

Save-A-Lot to add 7 stores in PA, NJ

Save-A-Lot announced that it will add seven new stores in PA and NJ. Three of the stores - two in North Philly and one in the Northeast - will be in Philadelphia. Stores will also be added in Norristown and Lebanon, PA, as well as Lindenwold and Bridgeton, NJ. The stores will range in size from 15,000 to 19,500 square feet.

Save-A-Lot, a subsidiary of Supervalu, currently operates 1,300 stores in the U.S.

Redner's succeeding by controlling costs

A Supermarket News story earlier this month reported that employee-owned Redner's Warehouse Markets is competing successfully with Walmart and others thanks to rigorous cost controls. The company's site selection strategy serves as a good example of these controls.

"We tend to go to smaller rural towns or the outskirts of urban areas just due to the negotiations and site selection that we use," said Redner's spokesperson Eric White. "We try to go to existing stores without having to build from the ground up."

Supervalu serves as Redner's supplier, but in effort to save money, the company buys direct and in bulk where it can. It also refrains from costly marketing, choosing instead to invest promotional dollars from manufacturers into the cost of goods.

Redner's tries to price its goods within 5% of Walmart on many items, and while Walmart has struggles in recent years with empty shelves, Redner's minimizes their out-of-stocks.

Although "warehouse" is still in the company name, in recent years the store has shifted to become 75% traditional supermarket and 25% warehouse.

"The bulk product that we were once able to offer isn't quite what the everyday consumer is looking for," according to White. "But consumers will come in and find that we're a traditional family-owned grocery store."

Redner's currently operates 44 Warehouse Market stores and 20 Quick Shoppes, and has an estimated $868 in annual sales.

Supervalu experiencing growth, ready to take on Aldi

Last week Supervalu announced that all three business segments - wholesale, Save-A-Lot and traditional food retail - grew in the company's fiscal third quarter. Overall, the company had $4.2 billion in sales, a 4.8% increase over the same quarter last year. Net earnings were $79 million.

Supervalu's wholesale business plans for growth in the near future with new accounts, and the company expects to add 65 new Save-A-Lot stores in 2015.

Supervalu also made news last week when CEO Sam Duncan said his company competes very well with Aldi and "will gladly take them on any time, any place."

Regarding Aldi's acquisition of Bottom Dollar, Duncan pointed out that a lot of the Bottom Dollar stores are paying high rents. "We were looking at some of those locations before Bottom Dollar, and we established our rate that we would pay," said Duncan. "And then, they came in above us and paid some very high prices. So, we'll see how that all unfolds."

Perishables driving sales growth for Save-A-Lot

Supervalu reported last month that a focus on perishables is responsible for sales growth at Save-A-Lot, whose fiscal second quarter sales increased 8% (to $1 billion) from the same quarter last year. Overall sales at Supervalu totaled $4 billion, a 1.8% increase.

Supervalu CEO Sam Duncan also reported that identical stores sales at Save-A-Lot improved by 6.5% and corporate stores within that network saw 8.2% identical store sales increases.

The company is investing in Save-A-Lot private label brands and plans to update the packaging of about 1,000 SKUs by the end of the fiscal year. 65 new Save-A-Lot stores are expected to open in 2015.

C&S Wholesale wins auction for AWI

As reported in the Food Trade News last week, a U.S. Bankruptcy judge declared C&S Wholesale Grocers the winner of the auction to acquire the assets of Associated Wholesalers, Inc. (AWI), the PA-based co-operative. The bid was valued at $288.1 million, about $3.5 million more than Supervalu's runner-up bid.

The acquisition is expected to close on November 11.

Related stories:
C&S Wholesale bids to acquire AWI (9/17/14)
King and Balducci's leaving White Rose for Wakefern (10/15/14)

Supervalu's customer data hacked for second time in six weeks

Supervalu experienced a security breach in its data systems for the second time in six weeks, the company said yesterday. According to the company, an intruder installed malware into the portion of its computer network that processes payment-card transactions for some of its retail customers.

Supervalu does not believe the intrusion succeeded in capturing data from any payment cards used at any stores other than four Cub Foods stores in Minnesota. The company has not determined if any cardholder data was stolen, but as a precaution it has offered customers who used payment cards complimentary consumer identification protection services.