Supervalu Announces That It Could Be Up For Sale

[Alpha8472]

http://supermarketnews.com/supervalu/su ... r-reaction

Supervalu should never have moved into retail. They were a wholesale company, and they at least made a profit that way.

When they bought what was left of Albertsons they had no clue how to run the supermarkets. They ran the stores into the ground and the entire company is going downhill.

Who would want to buy all of these stores that Supervalu has trashed? It doesn't look good in any way.

[klkla]

They actually got the best stores from Albertson's (Pacific Northwest, Southerm CA, Acme, Jewel and Shaws/Star). It was Cerebus that got the dogs which makes it even a bigger failure on the part of Supervalu to execute this acquisition. It's a simple case of mismanagement and the top management and board of directors should all be fired IMO.

It's not likely that one company will buy everything. The most likely scenario is that they will sell Sav-A-Lot first and try to focus on getting the conventional supermarkerts straightened out. It's also conceivable they will field offers for the different conventional supermarket divisions at the same time and if any the offers are good enough they will raise some capital from strategic asset sales. If I was a betting man I would bet on Kroger perhaps making an offer for at least Jewel and possibly Shaws/Star and/or Acme.

[storewanderer]

They didn't know much about retail before but ran some... for lack of better words... interesting formats prior to the Albertsons deal. They haven't changed those much. I suspect most of their original retail was and still is profitable.

So they buy Albertsons stuff and seem to decide they will learn how to do retail from Albertsons. What a horrible mistake. The reason Albertsons sold itself was because the management determined the company was worth more in parts than in whole and probably had the foresight to see that if they continued down the same path they had been on during the early 2000's that they would be out of business in 5-10 years.

Why do people buy stores from the failed Albertsons and they try to run them like Albertsons? If Albertsons ideas were so great, they would not be selling stores. Save Mart fell into the same trap and we see how they are doing. Stater threw the Albertsons ideas out the window and uses their own (and a lot of new... thanks to picking up a lot of management castoffs from the major chains in SoCal) ideas and we see they have been very successful.

So what does Supervalu do? Buy stores and continue on the same old path as the old pre-sale Albertsons was on. Terrible pricing. Pretty good merchandising and a decent private label program, though. Ongoing but fairly cheaply done (though some do get nicely done) store remodels but only in certain markets; other markets are neglected with stores in poor shape. Did I mention the terrible shelf pricing? A total lack of competitive reaction when new competition opens in a market. Poor staffing in stores. Supervalu has taken the staffing another step by continuing to cut hours and reduce service levels in perimeter departments; stores in suburbs are now closing as early as 10 PM while competition in those markets is open until Midnight at the earliest.

Supervalu has also been successful in running Jewel into the ground, which is something the old Albertsons did not do. You didn't see Albertsons clovers on the walls at Jewel (or Acme... or Shaws...) until Supervalu took over. WHY would you do that in those stores? Stupid. So, so stupid.

More recently I have seen Supervalu has converted the point of sale platform in these Albertsons stores from IBM (the industry standard, and good at supporting loyalty) over to an NCR system (which is terrible with loyalty, locks up their registers often if you don't scan the card at the beginning of the transaction, and required hardware to be fully replaced in a number of locations which was an unnecessary and probably not the best use of money right now). Another very stupid move.

And did I mention the terrible shelf pricing? I think I did... Really, selling everything for 20-25% higher than Safeway with far fewer promotions in place to balance out the pricing is not a good strategy.

[krogerclerk]

Besides the initial press release that SVU is exploring the option of putting itself up for sale, nothing has been in the news. This doesn't bode well as it shows the lack of interest from potential investors. Given the the size of SVU, if it were for sale, being broken up piecemeal is the most likely outcome. A new SuperValu wholesale unit will likely survive returning the company to its roots. Whether SVU would choose to keep Sav-a-Lot or not would depend upon its value to SVU as a wholesaler. SVU has pinned its hopes for growth on Save-a-Lot for the last several years, and the nature of it being a franchised brand lends to the possibility of remaining tied to the wholesale group.

The retail divisions are a mish-mash of players, some very different from one another and having varying degrees of success. While more tarnished under SVU than under ABS, Jewel still remains the "crown jewel" given that what damage SVU has done was offset by the damage Safeway has done to Dominick's. Since Jewel and Dominick's remain the two largest operators in Chicagoland, and Jewel gained share that Dominick's lost, the chain could be desireable to an investment group or Kroger. Since Kroger prefers to operate where its either number one or two, Acme and Shaw's could fit into Kroger acquiring Jewel. Hornbacher's could even fit in such an acquisition falling under Dillon's umbrella as Baker's did in Omaha. The Albertsons(and related banners) would be a tough sale as Kroger and Safeway banners seem to trump them in every major market as well as emerging competition from operators such as WinCo. As a result, the remaining Albertson's will likely result in a breakup with Kroger, Safeway, and maybe even ABS LLC gaining some stores. For ABS LLC to operate the Boise market stores, being the hometown of Albertsons and ABS LLC being headquartered there should improve their position.

[bm10k]

http://www.startribune.com/business/174767951.html

Looks Like it's Official as They are Talking to buyers

[Super S]

Here is an interesting article from The Idaho Statesman that is hinting at Albertsons having a single owner once again:

http://www.idahostatesman.com/2012/11/0 ... early.html

[submariner]

Here is an interesting article from The Idaho Statesman that is hinting at Albertsons having a single owner once again:

http://www.idahostatesman.com/2012/11/0 ... early.html

Considering Cerebus all but liquidated their share of the Albertsons pie in the original split, that's not exactly a good sign.

[Alpha8472]

Cerberus is a company that is only interested in making money from selling real estate. They closed tons of Albertsons Markets and sold the land to make money. They don't care about making money from selling groceries. Their main goal is to eventually sell off all of the remaining grocery stores.

Many of the Supervalu Albertsons stores will definitely close. Cerberus will probably sell some of the profitable supermarkets to other chains. However, the result will be that many of these grocery stores will close.

The few supermarkets that remain open and operating by Cerberus probably are just being run until another supermarket chain buys them. This is their goal. I admit some of the Albertsons, LLC stores are doing decent business, but this is all for show. They want those stores to look good so that someone else buys them and takes them off of Cerberus' hands.

I do believe that there is a chance that Jewel-Osco might be sold to Kroger. Jewel-Osco stores have a monopoly in many parts of the Chicago area and Kroger would love to get their hands these stores. Jewel-Osco might even become a Kroger banner just like Ralph's or Smith's. If Kroger gets these stores, Jewel-Osco could become a very popular chain once again.

[KingU8ol0Soopers]

Looks like Supervalu and Cerberus are pretty close to a deal in which Cerberus would buy some parts of the company and take a stake in the rest of the company.

According to the article, Cerberus would like to "reunite" the Albertson's chain.

http://online.wsj.com/article/SB1000142 ... 83982.html

(If you can only see an ad instead of the story, try using this link.)

[Alpha8472]

This sale of the Supervalu owned Albertsons stores to Albertsons, LLC could be good for those remaining Albertsons supermarkets. Supervalu can't run a supermarket at all. Albertsons, LLC has been running their stores quite well. Of course, Cerberus' real goal is to make money either by selling the supermarkets or selling the land or leases. Cerberus is focused on making money on real estate. Albertsons, LLC is here to run the supermarkets well so that someone will else will buy them. The end goal is to sell off these supermarkets one by one and make a profit. For now, if an Albertsons, LLC store is profitable Cerberus will keep it open and run it decently.

Supervalu has other stores throughout the country such as Jewel-Osco. Jewel-Osco is probably the most profitable supermarket chain that Supervalu owns. However, this is because Jewel-Osco has a virtual monopoly on grocery sales in the Chicago area. There are so many Jewel-Osco stores that people really don't have a choice except to shop at Jewel.

If Supervalu gets really desperate for cash I believe that they may sell Jewel-Osco to Kroger. If Kroger were to take control of Jewel-Osco, then everything would improve. Kroger really knows how to run a supermarket at least at their Kroger branded stores. Kroger would love to get their hands on a chain like Jewel-Osco and dominate the Chicago area.