Retail Watchers

It's the end of the quarter (1Q) with results coming in, and Albertsons seems to keep momentum going despite some of the problems it has in many of its divisions. Their sales increased by 2%, and they only lost $134 million as the digestion of Safeway continues. Albertsons has definitely done better than its former steward SuperValu, which DROPPED 4.5% in sales at their (remaining) retail stores.

http://supermarketnews.com/retail-finan ... narrows-1q

What momentum? Their sales increases before were in the 5% range... I think 2% is the smallest sales increase they've posted ever since first combining with Supervalu.

And we know what type of labor, perimeter in-stock, and store conditions were being seen in the stores last quarter. They slashed expenses and still can't turn a profit...

Where is the sales break down between the Supervalu stuff, Safeway stuff, and the former Albertsons LLC Stores like we were seeing in their previous reports?

The NorCal Division is a trainwreck. Last week I was in a store with no bananas in the middle of the afternoon and numerous other shortages in produce; no labor in the department. No store management anywhere. Checkout was good, minimal lines. Outdated items on the over stuffed tables in service bakery. Yesterday was in another NorCal Store. Total trainwreck again. One clerk in front of deli, well over a 5 minute wait to get helped, cook in the back of the deli couldn't stop sneezing and coughing, one checkout open with seven people in line before they called for another register (which was opened quickly), bakery items assembled so sloppily words cannot describe...

storewanderer wrote:What momentum? Their sales increases before were in the 5% range... I think 2% is the smallest sales increase they've posted ever since first combining with Supervalu.

And we know what type of labor, perimeter in-stock, and store conditions were being seen in the stores last quarter. They slashed expenses and still can't turn a profit...

Where is the sales break down between the Supervalu stuff, Safeway stuff, and the former Albertsons LLC Stores like we were seeing in their previous reports?

The NorCal Division is a trainwreck. Last week I was in a store with no bananas in the middle of the afternoon and numerous other shortages in produce; no labor in the department. No store management anywhere. Checkout was good, minimal lines. Outdated items on the over stuffed tables in service bakery. Yesterday was in another NorCal Store. Total trainwreck again. One clerk in front of deli, well over a 5 minute wait to get helped, cook in the back of the deli couldn't stop sneezing and coughing, one checkout open with seven people in line before they called for another register (which was opened quickly), bakery items assembled so sloppily words cannot describe...

Obviously it's no news to pop the champagne, and it's probably likely that one division (former Safeway?) is likely losing sales. NorCal needs help, no question, and heads should be rolling for it. As inexcusable as it is, it doesn't represent the entire chain, and somewhere Albertsons must be doing something right...which I've always felt in recent months that Albertsons tends to go three steps forward two steps back and is improving, though not as much as should be.

pseudo3d wrote:

storewanderer wrote:What momentum? Their sales increases before were in the 5% range... I think 2% is the smallest sales increase they've posted ever since first combining with Supervalu.

And we know what type of labor, perimeter in-stock, and store conditions were being seen in the stores last quarter. They slashed expenses and still can't turn a profit...

Where is the sales break down between the Supervalu stuff, Safeway stuff, and the former Albertsons LLC Stores like we were seeing in their previous reports?

The NorCal Division is a trainwreck. Last week I was in a store with no bananas in the middle of the afternoon and numerous other shortages in produce; no labor in the department. No store management anywhere. Checkout was good, minimal lines. Outdated items on the over stuffed tables in service bakery. Yesterday was in another NorCal Store. Total trainwreck again. One clerk in front of deli, well over a 5 minute wait to get helped, cook in the back of the deli couldn't stop sneezing and coughing, one checkout open with seven people in line before they called for another register (which was opened quickly), bakery items assembled so sloppily words cannot describe...

Obviously it's no news to pop the champagne, and it's probably likely that one division (former Safeway?) is likely losing sales. NorCal needs help, no question, and heads should be rolling for it. As inexcusable as it is, it doesn't represent the entire chain, and somewhere Albertsons must be doing something right...which I've always felt in recent months that Albertsons tends to go three steps forward two steps back and is improving, though not as much as should be.

On a related note, the Dallas Morning News just released a survey of the market shares for each DFW grocer this year, and the changes since 2015. In the first full year of operations for the combined Albertsons, Tom Thumb's market share has dropped slightly, while Albertsons and Market Street have remained constant. Cross reference this thread: http://www.retailwatchers.com/viewtopic.php?f=11&t=1219

I'm not a financial/accounting wiz, but if I'm reading this right, they want to borrow money (thus more debt) to pay off debts now? Seems like a "rob Peter to pay Paul" type situation, but I don't really know.

http://supermarketnews.com/retail-finan ... e-new-debt

Plus, they say that they'll use the $750 million to pay down existing debts and then use the "additional proceeds" for capex/working capital/etc. but that would leave only $10 million if they want to use the money that they say they're going to use it for, which doesn't leave a whole lot in the "use it for whatever" department.

I think since their losses are declining and also they have some sales momentum they are seen as a less risky borrower so they can get new debt at a lower interest rate than the old debt they are trying to replace. The current (ongoing) Interest Rate environment helps this situation also. Had rates increased this year this may not have worked out.

I think the new debt is going to be in the form of bonds which will be used to replace bank borrowings. In addition to the lower interest this also extends the period of time they have to pay off the debts (they only have to pay interest until the bonds mature). This will give them more day-to-day working capital even if they used all the proceeds to pay down the bank debt.