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Safeway confirms grocer is exploring possible sale

BY Michael Johnsen

PLEASANTON, Calif. — Safeway on Wednesday afternoon confirmed it is in discussions concerning a possible transaction involving the sale of the company. However, the company declined to comment further at this time. "Although the discussions are ongoing, the company has not reached an agreement on a transaction, and there can be no assurance that these discussions will lead to an agreement or a completed transaction," Safeway stated as part of its earnings release. 

Earlier this week, Credit Suisse research analyst Ed Kelly speculated that an outright sale to Cerberus/Kroger would be the best-case scenario for investors.

Safeway is postponing its annual investor conference, which had been scheduled for early March 2014, the grocer announced. 

Separately, the company has decided to distribute the remaining 37.8 million shares it owns of Blackhawk Network Holdings (approximately 72.2% of the outstanding Blackhawk shares) to Safeway stockholders. Currently, the plan is to make the distribution on a pro rata basis to all Safeway stockholders in a transaction intended to be tax-free to Safeway and its stockholders. However, if the company consummates a sale transaction, the distribution may be taxable. The timing and details of the proposed distribution will be determined in the near future, and further announcements will be made when those decisions have been finalized.

In addition, Safeway owns 49% of Casa Ley S.A. de C.V., the fifth largest food and general merchandise retailer in Mexico based on sales. Based on Casa Ley’s improving performance, the company believes it is an appropriate time to explore alternatives to monetize its investment in Casa Ley. 

Safeway reported sales and other revenue totaled $11.3 billion in the fourth quarter of 2013, a 0.9% increase. An identical-store sales increase (excluding fuel) of 1.6% was largely offset by a decline in fuel sales. For the year sales were $36.1 billion in 2013, essentially flat compared to 2012. Identical-store sales increases (excluding fuel) of 1.7% and higher other revenue were offset by lower fuel sales and the disposition of Safeway’s Genuardi’s stores.

"We are pleased with the progress we made in 2013," stated Robert Edwards, Safeway’s president and CEO. "Strategies to grow sales and improve operating profit dollars have begun to produce results. In 2013, we generated our best volume growth since 2006, and we had our best identical-store sales growth in the last five years. At the same time, we continue to pursue strategies to enhance momentum and increase shareholder value. We look forward to continuing progress in 2014."

Safeway posted net earnings from continuing operations of $100 million (35 cents per diluted share) for the fourth quarter of 2013, representing a 41.4% decline as compared to $170.7 million ($0.71 per diluted share) for the fourth quarter of 2012. The fourth quarter of 2013 includes a $57.4 million loss ($0.14 per diluted share) on foreign currency translation, a $30 million loss ($0.08 per diluted share) from the impairment of notes receivable and a $9.7 million gain (net of noncontrolling interest of $3.8 million) ($0.04 per diluted share) from the reduction of contingent consideration related to Blackhawk’s acquisition of Cardpool. 

 

 

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Hertz enters van share partnership with Costco in the U.K.

BY Antoinette Alexander

LONDON —The Hertz Corp. and Costco in the U.K. have teamed up to bring short-term Hertz 24/7 van rental to Costco’s members. 

The self-drive service operates at all 25 Costco warehouses in the U.K. Costco’s members can hire a van from the warehouse car parks to drive their purchased items home immediately.

"We have been growing our global van rental offering through Hertz 24/7 for over five years. Our Hertz 24/7 service enables Costco to provide its members with an attractive and efficient van delivery service. Hertz takes care of providing and maintaining the fleet and handling all customer transactions while Costco’s members can enjoy the convenience of taking their purchases home straightaway, rather than waiting for the goods to be delivered in the future,” stated Michel Taride, group president of Hertz International.

Sue Knowles, Costco’s marketing director, added, "Our agreement with Hertz 24/7 is another example of our dedication to improving member service, ensuring members can transport their purchases conveniently and at a low price. Given Hertz’s 24/7’s customer support network, combined with its solid reputation for reliability and experience of operating a large and strong van fleet across the U.K., I am confident that this agreement will further enhance the Costco member experience."

As well as with Costco, Hertz 24/7 has partnered with IKEA in the U.K. to offer customers access to van hire. Hertz 24/7 self-drive van hire is also available to customers of B&Q in the UK; IKEA, Castorama and the Casino supermarket chain in France; the DIY store Leroy Merlin and a number of IKEA stores in Spain; and Lowes DIY store in the United States.

 

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OurPet’s rolls out new line of toys, accessories

BY Ryan Chavis

FAIRPORT HARBOR, Ohio — OurPet’s, a pet supply company, announced the launch of a new line of products available through the food, drug and mass market channel. The Pet Zone brand will offer toys and accessories that are meant to enhance the well-being of pets.

Pet Zone’s launch will help ensure easier access to high-quality products for pets, the company said. "Rather than simply moving products to food, drug and mass-market channel after they age out of pet specialty, we’re carefully identifying the needs of FDM consumers and retailers by providing the products they need," said Dr. Steve Tsengas, president and chief executive officer of OurPet’s.

To further support the brand, the company recently launched a new website, PetZoneBrand.com, which provides resources for retailers and brokers and also includes an online portal with access to marketing and sales materials.

"We are very excited to launch this new brand," said Gabriella DeSantis, senior director of marketing. "The savvy Food/Drug/Mass consumer wants products for their pet that provide the same level of innovation and enrichment as those found in pet specialty stores, but at a greater value. The Pet Zone brand fills this requirement with a variety of products that include feeding and storage solutions for dogs and cats, dog and cat toys and waste management tools."

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