According to participants in Supermarket News' 23rd annual Financial Analysts' Roundtable, warehouse clubs, specifically Costco, may be primed for a growth surge.
Wolfe Research Managing Director Scott Mushkin said that Costco's broad mix of offerings make it a big draw.
"Costco, over time, has created more and more reasons to pay for that membership," Mushkin said. "It's an incredibly positive business model."
"They are probably the best merchants of any retailer I've ever covered," added Karen Short, managing director for equity research at Barclays Capital. "They keep pushing the envelope and keep pushing their vendors, and the deals and price point just keep getting better and better."
As for BJ's Wholesale Club, Mushkin had a negative outlook. "If there were a Costco and a BJ's next to each other, it doesn't make any rational sense to actually have a membership to BJ's because the offering is so much more extensive at Costco and the savings are better," he said.
The participants also singled out Target, which they believe could be a sleeping giant in grocery if it continues to improve its fresh offering and out-of-stocks, and improves on its execution. The panel cited Target's strong private labels and the company's ability to develop innovative departments and merchandising.
Showing posts with label Scott Mushkin. Show all posts
Showing posts with label Scott Mushkin. Show all posts
Monday, November 26, 2018
Thursday, February 25, 2016
Whole Foods getting flak from analysts over new 365 format
Whole Foods Co-CEO Walter Robb was widely criticized by analysts earlier this month when he outlined strategies for the rollout of the company's smaller "365 by Whole Foods Market" format. According to Whole Foods' website, the new stores, slated to begin opening this year, will offer convenience and everyday low prices on natural and organic products.
"Whole Foods is tilting its growth towards an unproven, discount format that appears to be directly aimed at a strong competitor, Trader Joe's," said Wolfe Research Managing Director Scott Mushkin. "Trader Joe's has been in the business for roughly a half century, does the discount treasure-hunt format exceptionally well, and is private, meaning it doesn't have to answer to public equity investors each quarter."
Mushkin added that Whole Foods' decision to reduce store labor to fund price investments has already had a negative impact on store conditions, and was critical of the company's decision to maintain earnings by buying back stock.
Many analysts probably also don't like Whole Foods' new program called "Friends of 365," where approved suppliers and vendors can set up shop in the 365 stores. The new chain's website says shoppers may see businesses such as record shops and tattoo parlors inside 365 stores in order to appeal to younger customers.
During a conference call with investors, Whole Foods said they have 13 leases signed for the new format, with the first 365 stores set to open in California, Oregon and Washington.
"Whole Foods is tilting its growth towards an unproven, discount format that appears to be directly aimed at a strong competitor, Trader Joe's," said Wolfe Research Managing Director Scott Mushkin. "Trader Joe's has been in the business for roughly a half century, does the discount treasure-hunt format exceptionally well, and is private, meaning it doesn't have to answer to public equity investors each quarter."
Mushkin added that Whole Foods' decision to reduce store labor to fund price investments has already had a negative impact on store conditions, and was critical of the company's decision to maintain earnings by buying back stock.
Many analysts probably also don't like Whole Foods' new program called "Friends of 365," where approved suppliers and vendors can set up shop in the 365 stores. The new chain's website says shoppers may see businesses such as record shops and tattoo parlors inside 365 stores in order to appeal to younger customers.
During a conference call with investors, Whole Foods said they have 13 leases signed for the new format, with the first 365 stores set to open in California, Oregon and Washington.
Friday, September 20, 2013
Supermarket analysts expect more industry consolidation
Supermarket analysts gathered at the 18th annual Supermarket News Analysts Roundtable in New York earlier this week and agreed that a new wave of consolidation will hit the industry in the near future, and that Kroger may lead the way as a buyer.
In the last two weeks two major deals have been announced: Albertsons LLC agreed to purchase United Supermarkets, and Yucaipa Cos. is planning to acquire Tesco's Fresh & Easy Neighborhood Market chain (Tesco paying Yucaipa to take on its Fresh & Easy grocery stores).
Analyst Gary Giblen (GMC Capital) said the underlying theme of future consolidation would be defensive, due in large part to the expansion of discounters creating "an impetus for companies to get bigger, to get more volume power and hopefully to get some operating synergies and economies of scale."
Scott Mushkin (Wolfe Research) said he expects Kroger, the largest supermarket chain in the United States, to get more aggressive since "the assets available aren't massively expensive, and in many cases Kroger is the most logical buyer."
Meredith Adler (Barclays Capital) pointed out that "really cheap money" promotes consolidation, but doubts there are many companies Kroger would want. She argued that Kroger's pending purchase of Harris Teeter simply shows that if you're a class act, run great stores and have positive comps, then you're an attractive takeover candidate.
The analysts also agreed that Cerberus Capital, which headed the group that acquired Albertsons, Acme and others from Supervalu earlier this year, might continue its involvement in the consolidation process, even though it has its hands full with the banners it bought.
In the last two weeks two major deals have been announced: Albertsons LLC agreed to purchase United Supermarkets, and Yucaipa Cos. is planning to acquire Tesco's Fresh & Easy Neighborhood Market chain (Tesco paying Yucaipa to take on its Fresh & Easy grocery stores).
Analyst Gary Giblen (GMC Capital) said the underlying theme of future consolidation would be defensive, due in large part to the expansion of discounters creating "an impetus for companies to get bigger, to get more volume power and hopefully to get some operating synergies and economies of scale."
Scott Mushkin (Wolfe Research) said he expects Kroger, the largest supermarket chain in the United States, to get more aggressive since "the assets available aren't massively expensive, and in many cases Kroger is the most logical buyer."
Meredith Adler (Barclays Capital) pointed out that "really cheap money" promotes consolidation, but doubts there are many companies Kroger would want. She argued that Kroger's pending purchase of Harris Teeter simply shows that if you're a class act, run great stores and have positive comps, then you're an attractive takeover candidate.
The analysts also agreed that Cerberus Capital, which headed the group that acquired Albertsons, Acme and others from Supervalu earlier this year, might continue its involvement in the consolidation process, even though it has its hands full with the banners it bought.
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