Albertsons IPO- no status

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Re: Albertsons IPO- no status

Post by pseudo3d »

storewanderer wrote:
klkla wrote:Yes but ABS has been trying to float an IPO almost immediately since they bought Safeway.
I get the impression they were looking for a quick deal on the IPO and now it has not been so quick. ABS spent the first half of this year buying what felt like almost every store it could get its hands on, will that trend continue going forward? I was surprised they only got one store out of the Ahold/Delhaize transaction. I will also be surprised if they do not come forward as a buyer of Rite Aid/Walgreens Stores that are pending divest.

They can try to grow all they want but when you look online at what customers are saying about the stores it is not so good.

It would be interesting to see what division(s) they may sell if they opt to do that. That would sort of kill the whole growth story though. Or would it? Sell off assets deemed non core to invest in the business, consider other strategic acquisitions, buy back shares (doesn't apply at this point since they have not IPOed) and pay down debt? Yikes, that sounds a lot like what Safeway said when it sold Canada off...
Maybe I'm an optimist, but I wouldn't look too deep into the whole "buying more stores" deal. In 2016, what did they buy? They bought Haggen, which they won because none of the other bidders were "qualified" (or some such), they bought Paul's (only four stores, I get the impression the owner retired), and one store from Ahold/Delhaize. [EDIT: United bought some stores, but they're a bit different--operations and staffing there are far better than the rest of the company] The one store was probably all that could be realistically done. Most of the overlap wasn't in existing territory, and the ones that were were Food Lion stores also in ACME territory (probably not a good choice). Could they have boosted Shaw's/Star Market numbers? Maybe. Maybe it IS ready to be sold off.

And while comparisons to circa 2013 Safeway are troubling, Safeway had been struggling for years, because unlike Albertsons, which tended to more or less integrate ASC stores into their fold, Safeway's acquisitions were nothing less than a disaster. The other big difference between Safeway's Canada divestment and anything Albertsons may be considering is that it was a massive sale. If Albertsons put Shaw's up for sale tomorrow, all that would be going is a 130 store chain, its HQ, and two distribution centers. They could spin it as a marginally profitable, non-strategic asset. Comparatively, Safeway sold their Canadian operations, which included over 200 stores (all but 14 of them with pharmacies), 62 gas stations, 10 adjacent liquor stores, 4 distribution centers (and a "related wholesale business", according to a news article I found regarding the sale), and 12 manufacturing facilities. That's not a "strategic divestment", that's either a sign of desperation or a prelude to a massive reorganization. If Safeway had introduced an exciting new store prototype, lower prices, or significantly improved operations, then that might've really helped them out...and it turned out to be desperation, as within a year, Dominick's was history, and it was engaged to Albertsons.

Albertsons IS doing asset sales technically. In June, it sold both of the old Vons DCs (well, they kept part of one, apparently) for $250M, chances are it will be the Lucerne facilities before any division sales. They already closed two bakeries (those have disappeared from the list) and I can imagine more will come.
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Re: Albertsons IPO- no status

Post by pseudo3d »

Another Supermarket News article said that SSIs have "flatlined" (no big growth increases). I don't think that should take to mean that they're screwed (they're not LOSING sales like SVU is, that would be bad), but they need to do something. It looks like they have done some sales of properties, about two months ago, they sold their Waco, TX store to their leasee, Harmony Science Academy (LLC has not operated a store there in over a decade). They need to get a third party for distributing to Florida (the pre-1990s Albertsons had a lot of areas that they didn't self-distribute to, so there's no shame there) as well as probably getting rid of DCs in outlier areas (like Texas). They also need to combine Dallas into United somehow (I'm sure United already had a Dallas "group" that was doing the Market Street stores), which can save money in that division. For Shaw's, they need to fish or cut bait, since they've had no big store plans there.

EDIT: They also need to get rid of Haggen entirely, either by integrating it into the Seattle Division (if nothing else, at least integrate the HQs) or dumping it entirely.
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Re: Albertsons IPO- no status

Post by storewanderer »

Even Kroger is struggling to show same store sales increases now. They are clearly having to work very hard to get the 2% or whatever little increases they are getting. I am seeing more aggressive promotions on core grocery items like dairy specifically, and also promotions in categories they previously did not promote very much (non food categories).

Of course Albertsons/Safeway is having difficulty growing sales. Their prices are too high. They have used loss leader ads to drive traffic but have not addressed their regular shelf pricing being too radically high. This was something that should have been done immediately when the company went private as it would have been a bitter pill to swallow but better sooner than later. Instead they just keep buying competitor stores. The strategy seems to be to try to have a monopoly over stores in given areas to force customers to shop there; with less competition they can price how they like and people will have to deal with it or drive quite far to buy groceries. Lately in NorCal Division they have been increasing prices on a lot of center store items they were already too high on.

I am not aware of Albertsons using third party distribution prior to the 1990's. I always thought they self distributed.
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Re: Albertsons IPO- no status

Post by pseudo3d »

storewanderer wrote:Even Kroger is struggling to show same store sales increases now. They are clearly having to work very hard to get the 2% or whatever little increases they are getting. I am seeing more aggressive promotions on core grocery items like dairy specifically, and also promotions in categories they previously did not promote very much (non food categories).

Of course Albertsons/Safeway is having difficulty growing sales. Their prices are too high. They have used loss leader ads to drive traffic but have not addressed their regular shelf pricing being too radically high. This was something that should have been done immediately when the company went private as it would have been a bitter pill to swallow but better sooner than later. Instead they just keep buying competitor stores. The strategy seems to be to try to have a monopoly over stores in given areas to force customers to shop there; with less competition they can price how they like and people will have to deal with it or drive quite far to buy groceries. Lately in NorCal Division they have been increasing prices on a lot of center store items they were already too high on.

I am not aware of Albertsons using third party distribution prior to the 1990's. I always thought they self distributed.
Remember, Albertsons had Florida stores since the late 1970s (officially, after the split with Skaggs), but they did not open a DC there until 1994. The Funding Universe article mentions that in 1993, only two-thirds of Albertsons merchandise were purchased through its own systems. [http://www.fundinguniverse.com/company-histories/albertson-s-inc-history/]

There actually are a few things they can do regarding cutting losses without hurting store count, labor, pricing, or manufacturing plants.
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Re: Albertsons IPO- no status

Post by storewanderer »

I highly doubt Winn Dixie is in a position to take any stores over. I think Albertsons/Safeway will retain the FL operation given the investment they made there. Expansion is questionable but continued operations, I believe, will be what we see. They are obviously okay with the remote supply issue and other issues involved with operating those three medium volume at best stores well over a day's drive from distribution. As I've said, Florida is a nice place to visit during a lot of the year and the placement of one store left in metro Orlando, one left in metro Miami, and one left in metro Tampa seems awfully well planned. It is also great for the shoppers who liked to shop somewhere but Publix even if they have to drive a ways...
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Re: Albertsons IPO- no status

Post by veteran+ »

storewanderer wrote:I highly doubt Winn Dixie is in a position to take any stores over. I think Albertsons/Safeway will retain the FL operation given the investment they made there. Expansion is questionable but continued operations, I believe, will be what we see. They are obviously okay with the remote supply issue and other issues involved with operating those three medium volume at best stores well over a day's drive from distribution. As I've said, Florida is a nice place to visit during a lot of the year and the placement of one store left in metro Orlando, one left in metro Miami, and one left in metro Tampa seems awfully well planned. It is also great for the shoppers who liked to shop somewhere but Publix even if they have to drive a ways...
I know the neighborhood in Oakland Park (Fort Lauderdale, FL.), Broward County very well. I lived in neighboring Wilton Manors and managed a couple of nearby stores.

This is a diverse neighborhood in all ways with a significant gay presence. Publix does an excellent job catering to this diverse neighborhood (much better job than most Miami {Dade County} areas) except for the low income folks (prices, hispanic and black foods).

What could Safeway possibly do to be successful or break even?
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Re: Albertsons IPO- no status

Post by pseudo3d »

storewanderer wrote:I highly doubt Winn Dixie is in a position to take any stores over. I think Albertsons/Safeway will retain the FL operation given the investment they made there. Expansion is questionable but continued operations, I believe, will be what we see. They are obviously okay with the remote supply issue and other issues involved with operating those three medium volume at best stores well over a day's drive from distribution. As I've said, Florida is a nice place to visit during a lot of the year and the placement of one store left in metro Orlando, one left in metro Miami, and one left in metro Tampa seems awfully well planned. It is also great for the shoppers who liked to shop somewhere but Publix even if they have to drive a ways...
I never said W-D could take over any stores. The way I see it, they should retain Florida but don't supply it with Eastern Division, and have SuperValu or another partner take care of the distribution. The idea of Albertsons being a 100% self-distributed system at this point is uneconomical, especially at the center store prices they're asking.

- The Houston warehouse is oversized for the low number (<70) stores they service, and they can sell that warehouse (especially since it's discontiguous from any other ALB/SWY division.
- Putting the Dominick's "dark stores" on the market can cut losses if they're not planning to put stores there. They still run the show in Chicagoland, and they're not in danger of losing market share (and holding onto dark stores can still bite you in the end, just ask Winn-Dixie)
- The South division is redundant with United, and it should be eliminated, especially since they have redundant DCs (United bought a warehouse two doors from the Tom Thumb warehouse). The catch is United is the better operator and they should be able to absorb the Tom Thumb and Albertsons stores in the Dallas division. According to the Star Brokerage website (this page, though it's currently offline), the "South" division (Albertsons + Tom Thumb) has twice the number of stores than United. United has grown its store count since then but it's better equipped to handle the South division. The trick would be to phase in stores quite slowly, we all know what happens when chains expand too fast with acquisitions, though unlike Haggen it's still the same company with largely the same products, so it won't be that big of a change (especially since no remodel required).
- Albertsons has had the Salt Lake City DC for the Intermountain Division for years but there's no stores in the area (except Super Saver), as SuperValu had sold off the remaining Albertsons stores under their reign. They could build a new DC in Idaho using local tax breaks and then sell off the SLC warehouse to another party, and come out ahead in the long run.

The idea of the IPO is to raise money by essentially selling off pieces of the company, so why not try to sell a chunk themselves to a third party? In my dreams, they could try to cozy up to Loblaws, and sell themselves to them. After all, it would be a neat cross-merchandising opportunity (as well as trying new ideas, the company could use a breath of innovation) to sell Joe Fresh in America again (Hy-Vee is doing Tesco's clothing brand, and Joe Fresh is no longer sold at JCPenney), and many of the brands under Albertsons sold President's Choice in their glory days (Randalls/Tom Thumb, Jewel-Osco)
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Re: Albertsons IPO- no status

Post by veteran+ »

BTW.............I can't wait to read about Tesco's clothing lines failing at Hy-Vee.

You'll see.............lol

;-)
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Re: Albertsons IPO- no status

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veteran+ wrote:BTW.............I can't wait to read about Tesco's clothing lines failing at Hy-Vee.

You'll see.............lol

;-)
Yeah, I know you hate Tesco, but if they aren't trying to run a whole chain (into the ground?) then it might succeed under another retailer who knows what they're doing.
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Re: Albertsons IPO- no status

Post by storewanderer »

I am surprised Hy Vee picked up Tesco's clothing line. The good thing about Hy Vee is they will not beat a dead horse. If this does not work, the store management will communicate that up to headquarters fast and that stuff will be out of there in short order. Hy Vee's unique operating structure will not allow for a non-performing product line to be there for long.
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