Supervalu to focus on ‘right-sizing’ going forward
When Supervalu announced this past summer a review of strategic alternatives, its goals were to improve its business, better position the company for the future and create the best opportunity to deliver shareholder value. This effort has led to the sale of 877 stores to AB Acquistion.
Following the sale, Supervalu will consist of its wholesaler business, which serves 1,950 stores across the country; Save-A-Lot with approximately 1,300 stores across 35 states; and Supervalu’s regional retail food banners Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s.
The new Supervalu will be a $17 billion business comprised mostly of its distribution business (47% of revenues), Save-A-Lot (25%) and 191 regional supermarkets (28%). According to DSN estimates, the chain will generate about $381 million in annual pharmacy sales.
"We had viewed Jewel [which was sold] and Save-A-Lot [which was not] as the most attractive banners. While not deleveraging, the transaction will remove some of the weakest banners, including Shaw’s/Star Market and Albertsons," stated Citi Research analyst Deborah Weinswig in a recent research note.
At the helm of the newly formed Supervalu is former OfficeMax chief Sam Duncan. Duncan, who has more than 40 years of retail experience, served as president and CEO of ShopKo Stores prior to joining OfficeMax. He succeeds Wayne Sales, who served as the company’s president and CEO since July 2012.
Introducing the new Albertsons
When Albertson’s LLC announced last month that its parent company, AB Acquisition, an affiliate of Cerberus Capital Management, signed an agreement to acquire 877 stores from Supervalu in a deal valued at some $3.3 billion — a move that will reunite all Albertsons stores under one operator — it recast the rankings of the industry’s leading pharmacy retailers.
Following the acquisition, Albertsons and its subsidiaries — which will include the Albertsons, Acme, Jewel-Osco, Shaw’s and Star Markets, and related Osco and Sav-on in-store pharmacies — will consist of 1,069 stores and 12 distribution centers, and will employ roughly 110,000 associates.
According toDSNestimates, the New Albertsons will have $21.4 billion in total sales and about $1.8 billion in pharmacy sales.
While Albertson’s LLC has indicated that "it’s too soon to speculate about key initiatives or new developments" that will take place following the closing of the acquisition, what is known is that several industry observers are optimistic about the deal.
"We believe that similar to the last Albertsons’ transaction, that this also is a tremendous asset play for Cerberus," stated Citi Research analyst Deborah Weinswig.
In 2006, the Cerberus-led group acquired more than 650 Albertsons stores — a deal that has proven to be a win, thanks in part to store sales and real estate moves over the years.
"In 2006, we acquired a set of stores that lacked investment and were in tough shape, but … we have grown into a solid regional supermarket chain with growing sales. I believe we can be successful again," stated Albertson’s LLC CEO and retail veteran Bob Miller. In addition to leading the new Albertsons, Miller also will assume the role of nonexecutive chairman of Supervalu.
Fred’s tests pharmacy-centric GetWell
MIDDLETON, Tenn. — Fred’s Super Dollar is piloting a new store concept called GetWell Drug and Dollar that features a heavy focus on pharmacy, OTC and value-oriented convenience basics. The 8,000-sq.-ft. locations, half the size of a typical Fred’s, will field some 7,500 front-end SKUs, 30% of which will be comprised of health-and-wellness items.
While the store may be smaller, Fred’s has actually expanded its assortment across several nonprescription categories, including analgesics, first aid, digestives and vitamins, minerals and supplements. And there will be no tobacco sold in the store, though a full line of e-cigarettes will be on display.
The four test markets are located in Middleton, Tenn.; Glenwood, Ga.; Leland, Miss.; and Sulligent Ala.
Editor’s Note: The store tour page in the Jan. 14 issue of DSN featured photos of a standard Fred’s Super Dollar prototype store, rather than the smaller-box GetWell Drug and Dollar concept featured here. DSN regrets this oversight.
For more photos, click here.