Albertsons buys Kings

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retailfanmitchell019
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Albertsons buys Kings

Post by retailfanmitchell019 »

ACI (Albertsons) is buying 27 Kings Food Markets and Balducci's stores for $96 million, after the owner, KB US Holdings, filed for Chapter 11 bankruptcy protection in August.
The acquisition is expected to close later this fiscal year, and the stores will be integrated into the Mid-Atlantic division. These stores, located mostly in the outer NYC suburbs, will keep their Kings and Balducci's banners. If these stores are keeping their banners, will ACI treat the stores as if they were the Acme equivalent to Pavilions?
I expect ACI to go for Cub or maybe some SpartanNash stores next.
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Re: Albertsons buys Kings

Post by mbz321 »

Odd move considering the Acme branded store are overall struggling in the region.
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Re: Albertsons buys Kings

Post by storewanderer »

retailfanmitchell019 wrote: October 14th, 2020, 8:01 pm ACI (Albertsons) is buying 27 Kings Food Markets and Balducci's stores for $96 million, after the owner, KB US Holdings, filed for Chapter 11 bankruptcy protection in August.
The acquisition is expected to close later this fiscal year, and the stores will be integrated into the Mid-Atlantic division. These stores, located mostly in the outer NYC suburbs, will keep their Kings and Balducci's banners. If these stores are keeping their banners, will ACI treat the stores as if they were the Acme equivalent to Pavilions?
I expect ACI to go for Cub or maybe some SpartanNash stores next.
Cub would be a terrible move for Albertsons. With Albertsons pricing strategy those stores would perform horribly. Hy Vee will continue to eat more and more of those store's business. I expect the Cub Stores to move to franchise operators and continue on generally how they are.

King's probably didn't run high enough volumes to attract the interest of Shop Rite, Ahold, etc. So they go to Albertsons who runs some of the lowest volume, least productive stores on the east coast. It kind of makes sense. I assume Albertsons can maintain whatever quality this King's offered. King's is run by a previous Albertsons executive anyway, may be how this deal came to be.
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Re: Albertsons buys Kings

Post by pseudo3d »

storewanderer wrote: October 14th, 2020, 10:48 pm
retailfanmitchell019 wrote: October 14th, 2020, 8:01 pm ACI (Albertsons) is buying 27 Kings Food Markets and Balducci's stores for $96 million, after the owner, KB US Holdings, filed for Chapter 11 bankruptcy protection in August.
The acquisition is expected to close later this fiscal year, and the stores will be integrated into the Mid-Atlantic division. These stores, located mostly in the outer NYC suburbs, will keep their Kings and Balducci's banners. If these stores are keeping their banners, will ACI treat the stores as if they were the Acme equivalent to Pavilions?
I expect ACI to go for Cub or maybe some SpartanNash stores next.
Cub would be a terrible move for Albertsons. With Albertsons pricing strategy those stores would perform horribly. Hy Vee will continue to eat more and more of those store's business. I expect the Cub Stores to move to franchise operators and continue on generally how they are.

King's probably didn't run high enough volumes to attract the interest of Shop Rite, Ahold, etc. So they go to Albertsons who runs some of the lowest volume, least productive stores on the east coast. It kind of makes sense. I assume Albertsons can maintain whatever quality this King's offered. King's is run by a previous Albertsons executive anyway, may be how this deal came to be.
They outbid the $75M stalking horse bid by investors when they went bankrupt, so I'm a little surprised at this. I figured that if Albertsons was going to go into the Northeast more, it would be buying Gristedes from Red Apple Group, or if they were going to do an acquisition, it would be some small group of independent stores, like what it did around 2016 (Paul's, Lamb's Nature's Choice Market, Lawrence Bros., G&G). Plus, they ignored all of Fairway's stores, which (to me) signaled that they weren't interested in expanding in New York/NJ/CT for the time being.

I wonder if they'll kill off one of the two names. Balducci's in particular seems to have a really spotty history in the last 15 years, closing any store (especially a FLAGSHIP store) in less than six months is a huge red flag
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Re: Albertsons buys Kings

Post by klkla »

Don't these store overlap with the former A&P stores they bought and converted to Acme? If so it would make sense to keep the King's and Balducci's banners and convert the Acme stores being as they are not doing very well under that name.
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Re: Albertsons buys Kings

Post by storewanderer »

klkla wrote: October 15th, 2020, 3:50 pm Don't these store overlap with the former A&P stores they bought and converted to Acme? If so it would make sense to keep the King's and Balducci's banners and convert the Acme stores being as they are not doing very well under that name.
That may actually make sense to convert some of the Acme locations to these upscale formats and get rid of the Acme format in those markets as it is obviously not doing very well.

As far as why they didn't go after Fareway, it was probably because they are not capable of running a store that does the volume and requires the labor investment on the perimeter of Fairway, unless the store is located in Boise, in which case they can make it happen.
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Re: Albertsons buys Kings

Post by pseudo3d »

storewanderer wrote: October 15th, 2020, 7:40 pm

That may actually make sense to convert some of the Acme locations to these upscale formats and get rid of the Acme format in those markets as it is obviously not doing very well.
I think there are a few ACME stores in affluent areas, but converting them at this stage seems like a bad idea. (Remember, Balducci's/Kings is the bankrupt one). I also think that overlap isn't a problem since they're buying only 27 of the 32 stores (34 if you count on the "Balducci's Gourmet on the Go" convenience stores).
As far as why they didn't go after Fareway, it was probably because they are not capable of running a store that does the volume and requires the labor investment on the perimeter of Fairway, unless the store is located in Boise, in which case they can make it happen.
Well, especially in the Mid-Atlantic Division's case, most of their stores tend to be older stores or stores bought from a company that was already on the ropes, and if I recall, some of the Fairway stores were losing money before they were sold, and as a result went to some obscure local operators instead of big names.

I also think that in the future, Balducci's might be eliminated as a nameplate and used as a label only.
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Re: Albertsons buys Kings

Post by rwsandiego »

storewanderer wrote: October 15th, 2020, 7:40 pm
klkla wrote: October 15th, 2020, 3:50 pm Don't these store overlap with the former A&P stores they bought and converted to Acme? If so it would make sense to keep the King's and Balducci's banners and convert the Acme stores being as they are not doing very well under that name.
That may actually make sense to convert some of the Acme locations to these upscale formats and get rid of the Acme format in those markets as it is obviously not doing very well.

As far as why they didn't go after Fareway, it was probably because they are not capable of running a store that does the volume and requires the labor investment on the perimeter of Fairway, unless the store is located in Boise, in which case they can make it happen.
Given Fairway filed for bankruptcy twice in four years, it appears they were incapable of doing the same. They did, however, appear to be capable of lavish spending on executive salaries, as this article indicates.

King's and Balducci's seems to have fallen victim to high debt load and the infrastructure costs associated with running a grocery chain, but not excessive spending on executive salaries. In other words, they are less damaged damaged goods than Fairway.
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Re: Albertsons buys Kings

Post by storewanderer »

rwsandiego wrote: October 16th, 2020, 10:52 pm
King's and Balducci's seems to have fallen victim to high debt load and the infrastructure costs associated with running a grocery chain, but not excessive spending on executive salaries. In other words, they are less damaged damaged goods than Fairway.
Fairway ran very high volume stores that skewed to be pretty good size, and was a private equity rapid expansion play back when it went bankrupt the first time. As you point out with Fairway, expenses were out of control- not only on executives, but on real estate and other operating costs as well. They had their own extensive private label for what was it at its height, about 15 stores? That is nice, but that is not practical save for a few special regionally sourced items. However recall that before the first bankruptcy Fairway was supposed to be an expansion play. So they built an infrastructure to be a much larger chain than they were. However, they did have some good very high volume stores due to their size and the format they ran (bigger stores, big fresh departments, packed departments). The only reason Fairway ran as long as it did, was due to the high volumes its stores did. And some of those stores did go to Shop Rite operators which really only deal with high volume stores.

I took a look at these King's Stores online. This looks quite similar to the bay area Andronico's Stores (before Safeway bought them, converted them to Safeway, then decided to backtrack on that and convert them back to Andronico's). However in reading the Google reviews, they are not nearly as highly regarded as Andronico's (pre-Safeway) was.

One thing that struck me about King's was their ratings on Google were pretty ho hum. They were mostly in the low 4. range which is quite poor for an upscale grocer (usually you see 4.5 and higher for upscale grocers). Many Google reviews commented that the stores were typically not crowded, and in all of the store photos I saw, all I saw were nearly empty stores. I never did figure out who their supplier was (didn't see any shelf photos with private label items, maybe they don't have much private label stuff in their format).

So my assessment of King's is they went bankrupt not only due to debt which was clearly an issue, but also because their store volumes were too low. Perhaps the issue was there were other new players who came along running upscale formats and doing a better job.
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Re: Albertsons buys Kings

Post by pseudo3d »

Maybe if Kings isn't really as nice as Albertsons would like it be, maybe the solution really is to take Kings downscale and replace ACME in North Jersey/NY entirely. It should be noted that the Kings logo has changed from the light green logo with the whisk to something a bit more pedestrian-looking (in blue, looking vaguely like it should be pronounced as "K'ngs").

They have their own loyalty program, "myKingsExtra", which is uncharacteristic for an upscale store.
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