Albertsons announces strategic review of company

This is the place for general and miscellaneous posts on topics which might extend past the boundaries of any specific region. No non-grocery posts.
storewanderer
Valued Contributor
Valued Contributor
Posts: 8856
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 463 times
Contact:
Status: Online

Re: Albertsons announces strategic review of company

Post by storewanderer »

I see El Rancho opened a store in Liberal, Kansas.

There is a Dillons there with the F4L interior and Kroger hasn't done that interior outside F4L areas for a decade so the market was likely ripe for a real hispanic format.

But I am a bit puzzled by this location selection. Why Liberal, Kansas? And why El Rancho and not Amigos (Amarillo where United is run from is closer to Liberal than Dallas where El Rancho is run from).

Also for some reason this El Rancho Store is selling AWG Private Labels instead of Signature brands. Also is on separate IT systems, etc. from the main chain.

It seems like Albertsons has even less control over this operation than Kroger had over "Lucky's" (Lucky's was using Kroger for various products and also IT).

The store was previously a different hispanic format called El Gran Mercado (also AWG supplied) that appears to have gone out of business.
HCal
Gold Member
Gold Member
Posts: 242
Joined: February 1st, 2021, 11:18 pm
Has thanked: 2 times
Been thanked: 91 times
Status: Offline

Re: Albertsons announces strategic review of company

Post by HCal »

From what I can tell, Albertsons only has a partial stake in El Rancho. I can't find a number, but it's probably not a majority. So the management of El Rancho isn't under the direct control of Albertsons, and they can't just swap it out for another banner.

As for the store brands, I have no idea. Maybe it's the distance from the rest of the chain? An AWG warehouse may be closer and therefore cheaper than the nearest Albertsons warehouse.
pseudo3d
Valued Contributor
Valued Contributor
Posts: 3248
Joined: November 12th, 2015, 7:01 pm
Has thanked: 20 times
Been thanked: 66 times
Status: Offline

Re: Albertsons announces strategic review of company

Post by pseudo3d »

El Rancho is only minority owned by Albertsons. It can generally expand where it wants to, and if it's in Kansas, so be it. Though if Albertsons looking for cash, El Rancho would probably be the first to go.

So there was an article in a Boise publication that sheds more light on the strategic review; basically, when Cerberus dumps its stock, the stock price will plummet. Buying back its own stock will produce debt it doesn't need to have, and nobody seems to be stepping up to the plate.

Courting Lone Star Funds will allow Albertsons to take over SEG, and that would definitely shake things up...
pseudo3d
Valued Contributor
Valued Contributor
Posts: 3248
Joined: November 12th, 2015, 7:01 pm
Has thanked: 20 times
Been thanked: 66 times
Status: Offline

Re: Albertsons announces strategic review of company

Post by pseudo3d »

This article that was posted strongly suggests that ABS wants to pull a Seritage and spin off a lot of real estate it owns. It's probably not as desperate-looking as Seritage but I can see "Albertage" just a way of shuffling assets around to make the bottom line look better. Unlike Seritage, those stores will probably still be in business five years from now.

https://boisedev.com/2022/06/14/alberts ... key-focus/

It is also not hard to imagine that Cerberus was playing the long game to strip off the real estate a la Mervyn's...
storewanderer
Valued Contributor
Valued Contributor
Posts: 8856
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 463 times
Contact:
Status: Online

Re: Albertsons announces strategic review of company

Post by storewanderer »

pseudo3d wrote: June 15th, 2022, 1:24 pm This article that was posted strongly suggests that ABS wants to pull a Seritage and spin off a lot of real estate it owns. It's probably not as desperate-looking as Seritage but I can see "Albertage" just a way of shuffling assets around to make the bottom line look better. Unlike Seritage, those stores will probably still be in business five years from now.

https://boisedev.com/2022/06/14/alberts ... key-focus/

It is also not hard to imagine that Cerberus was playing the long game to strip off the real estate a la Mervyn's...
Real estate market is in the process of crashing. Rates are going up, any buyer would need financing, and these higher rates are likely to be temporary. I'd say they missed their best chance.

If they do go forward now these higher interest rates will be "baked in" to whatever leaseback deals they sign, which will only hurt them more from a competitive standpoint from competitors who just keep owning stores and not trying to play real estate games in an Eddie-like fashion.
pseudo3d
Valued Contributor
Valued Contributor
Posts: 3248
Joined: November 12th, 2015, 7:01 pm
Has thanked: 20 times
Been thanked: 66 times
Status: Offline

Re: Albertsons announces strategic review of company

Post by pseudo3d »

storewanderer wrote: June 15th, 2022, 11:12 pm
pseudo3d wrote: June 15th, 2022, 1:24 pm This article that was posted strongly suggests that ABS wants to pull a Seritage and spin off a lot of real estate it owns. It's probably not as desperate-looking as Seritage but I can see "Albertage" just a way of shuffling assets around to make the bottom line look better. Unlike Seritage, those stores will probably still be in business five years from now.

https://boisedev.com/2022/06/14/alberts ... key-focus/

It is also not hard to imagine that Cerberus was playing the long game to strip off the real estate a la Mervyn's...
Real estate market is in the process of crashing. Rates are going up, any buyer would need financing, and these higher rates are likely to be temporary. I'd say they missed their best chance.

If they do go forward now these higher interest rates will be "baked in" to whatever leaseback deals they sign, which will only hurt them more from a competitive standpoint from competitors who just keep owning stores and not trying to play real estate games in an Eddie-like fashion.
In addition to the retail real estate not being as valuable as it once was, they've already plucked a lot of the low-hanging fruit when it comes to the real estate leasebacks. That's not even counting previous sales. The South division is just about worthless in terms of their Safeway-sourced stores because either under Safeway (or maybe even the brief time when Randalls was majority-owned by private equity), most of those stores were sold and leased back.

The most troubling part about all this is that the stock seems at odds with actually being a good grocer. The stock price rose when they talked about the "strategic review" and rumors swirled of selling off divisions, but then went back down when it became clear that they would remain solvent and not sell any stores.

Their store count has remained pretty stable either way, there used to be a yearly purge around January that would knock off about a dozen stores (there are closures here and there, another Randalls, a Shaw's, another Albertsons...), but then again, they're not opening stores (except for maybe United) or picking up independents.
storewanderer
Valued Contributor
Valued Contributor
Posts: 8856
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 463 times
Contact:
Status: Online

Re: Albertsons announces strategic review of company

Post by storewanderer »

pseudo3d wrote: June 21st, 2022, 8:05 am

In addition to the retail real estate not being as valuable as it once was, they've already plucked a lot of the low-hanging fruit when it comes to the real estate leasebacks. That's not even counting previous sales. The South division is just about worthless in terms of their Safeway-sourced stores because either under Safeway (or maybe even the brief time when Randalls was majority-owned by private equity), most of those stores were sold and leased back.

The most troubling part about all this is that the stock seems at odds with actually being a good grocer. The stock price rose when they talked about the "strategic review" and rumors swirled of selling off divisions, but then went back down when it became clear that they would remain solvent and not sell any stores.

Their store count has remained pretty stable either way, there used to be a yearly purge around January that would knock off about a dozen stores (there are closures here and there, another Randalls, a Shaw's, another Albertsons...), but then again, they're not opening stores (except for maybe United) or picking up independents.
The NorCal Division has had pretty good store development and it is ongoing. There has been a little growth in WA and in some random Albertsons markets as well a store here or there (TX, WY, ID, NV). A bit of growth under Safeway in AZ also. Is Jewel opening any new stores?

I get the feeling the only divisions they have that are successful market leading high volume stores are NorCal and Jewel. Also for some reason I think they are fairly solid in WA (not sure why that is...). The rest of the regions seem to have good stores here and there but when they get into competitive situations they typically underperform Kroger, a stronger regional, and/or Wal Mart. I think there are some regions they could pretty easily grab share from Kroger if they'd just get the prices down to a reasonable level but for whatever reason they just can't seem to make that happen.
arizonaguy
Veteran Member
Veteran Member
Posts: 888
Joined: July 12th, 2013, 6:07 pm
Has thanked: 1 time
Been thanked: 35 times
Status: Offline

Re: Albertsons announces strategic review of company

Post by arizonaguy »

storewanderer wrote: June 21st, 2022, 11:54 pm
pseudo3d wrote: June 21st, 2022, 8:05 am

In addition to the retail real estate not being as valuable as it once was, they've already plucked a lot of the low-hanging fruit when it comes to the real estate leasebacks. That's not even counting previous sales. The South division is just about worthless in terms of their Safeway-sourced stores because either under Safeway (or maybe even the brief time when Randalls was majority-owned by private equity), most of those stores were sold and leased back.

The most troubling part about all this is that the stock seems at odds with actually being a good grocer. The stock price rose when they talked about the "strategic review" and rumors swirled of selling off divisions, but then went back down when it became clear that they would remain solvent and not sell any stores.

Their store count has remained pretty stable either way, there used to be a yearly purge around January that would knock off about a dozen stores (there are closures here and there, another Randalls, a Shaw's, another Albertsons...), but then again, they're not opening stores (except for maybe United) or picking up independents.
The NorCal Division has had pretty good store development and it is ongoing. There has been a little growth in WA and in some random Albertsons markets as well a store here or there (TX, WY, ID, NV). A bit of growth under Safeway in AZ also. Is Jewel opening any new stores?

I get the feeling the only divisions they have that are successful market leading high volume stores are NorCal and Jewel. Also for some reason I think they are fairly solid in WA (not sure why that is...). The rest of the regions seem to have good stores here and there but when they get into competitive situations they typically underperform Kroger, a stronger regional, and/or Wal Mart. I think there are some regions they could pretty easily grab share from Kroger if they'd just get the prices down to a reasonable level but for whatever reason they just can't seem to make that happen.
I believe that the barriers to entry are fairly high for competitors in Northern California and Chicagoland. Northern California has a very minimal Walmart presence (and the Walmart presence it does have isn't dominated by Supercenters like elsewhere). The only major competitor in the Bay Area is Save Mart which is a rather mediocre grocer at best (I've always though they'd be a good merger partner for Stater Brothers but they'd probably destroy both chains if they merged) In Chicagoland previous management ran the only major competitor (Dominick's) into the ground and you've got a Krogerized Mariano's as well as a few small players with much lower store counts (plus Walmart and a small Meijer presence). Mariano's is built in part with a bunch of stores purchased from other chains.

Neither market seems to be like the DMV area where chains seem to be expanding like crazy and hurting Safeway (and Giant). I still feel that Safeway East and Houston / Austin are lost causes at this time. Too much competition in the DMV area from way too many grocers and Houston / Austin have the 800 lb gorilla of HEB and an outsized Walmart presence to contend with.
storewanderer
Valued Contributor
Valued Contributor
Posts: 8856
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 463 times
Contact:
Status: Online

Re: Albertsons announces strategic review of company

Post by storewanderer »

SamSpade wrote: March 2nd, 2022, 10:21 am It is interesting to see how some things happen...
In Seattle, this little Safeway that's adjacent to major growth/redevelopment near UW property's long-term lease was bought by Albertsons alongside nearby properties on or before 2021. Now in 2022, major upzoning (preferred policy of Seattle at this point) announced.

Purchase: https://shoppingcenterbusiness.com/cbre ... n-seattle/
Redevelopment announced: https://www.king5.com/article/news/loca ... 4c526cd902

Albertsons also is pursing something similar with the 15th Ave E and E John St. property I believe.
Safeway announced they will not be a part of the new University Village area development.
Not a surprise- their current store there is a poor performer. Ironically I thought they may have a chance with a smaller new store with added housing on the lot, but I guess they took a hard look at their reputation in that neighborhood and realized it would be best to leave.
Post Reply