Save-A-Lot could be sold to a Canadian firm

[Knight]

The divestiture of Save-A-Lot removes SuperValu from the limited assortment/discount grocery segment. SuperValu will focus on its supermarket brands. I wonder what its plans are for Farm Fresh and Shoppers as Publix further expands in Virginia and possible into the District of Columbia and Maryland.

[pseudo3d]

Well, what are they going to use it for? They say that most of it will be used to pay down debt, but will it be burned through as it continues to weaken, will they use it to prop up their grocery banners for a potential sale, or will it be used to assemble some sort of grand plan like a merger with TopCo?

TopCo Foods isn't a full line distributor. They produce 'house label' items for chains that are too small to have their own manufacturing. Supervalu has many of those functions covered, so that would be a worthless purchase. You know, much like buying 1/3 of Albertsons.

SuperValu's purchase of Albertsons wasn't a worthless purchase but it was incredibly ill-advised, considering SuperValu's existing retail holdings weren't doing terribly well or successful to begin with (Cub Foods being perhaps the exception but it was vulnerable that it started to suffer when Hy-Vee entered). Albertsons needed some leadership and a strong leader to get it to pull through after a series of missteps following the American Stores purchase, and SuperValu was not that suitor.

Back to the question in hand, I'm going to guess that the remaining moneys will be used to shore up the grocery banners as they prepare to leave the SuperValu nest. I'm wondering which brands will go through with this relatively unscathed, or if they'll be destroyed in the process.

[pseudo3d]

There was an article on the remaining retail banners, and apparently, SuperValu doesn't want to sell them because they'll lose those accounts.

http://supermarketnews.com/retail-finan ... il-banners

Now, I can only speak for myself, but that sort of thinking is a terrible strategy. Sales are continuing to fall, and the longer it goes on, the stores will be completely worthless. At this point, they could sell most of the stores for a decent amount of change, possibly even whole, but if it goes on TOO long, then all those will be is a collection of loser grocery stores riding out their leases with no identity and no future.

Trying to sell to independents is also a hard sell if the company itself is failing. SuperValu's best hope is to try to concentrate power in the Midwest, maybe end up selling out to/merging with NashFinch if it's a good choice strategically.