Albertsons closing MD Safeway distribution center

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BatteryMill
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Albertsons closing MD Safeway distribution center

Post by BatteryMill »

https://www.bizjournals.com/washington/ ... s_headline

What could this move mean for Safeway's east coast operations? As Acme is taking charge I assume that chain would be unfazed, but who knows what'll happen to Albertsons holdings in the D.C./Baltimore area... just sad to see such a cost-cutting move.
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Re: Albertsons closing MD Safeway distribution center

Post by pseudo3d »

BatteryMill wrote: January 30th, 2020, 5:28 pm https://www.bizjournals.com/washington/ ... s_headline

What could this move mean for Safeway's east coast operations? As Acme is taking charge I assume that chain would be unfazed, but who knows what'll happen to Albertsons holdings in the D.C./Baltimore area... just sad to see such a cost-cutting move.
Beat me to it! (Here's the archived link). Personally, I think that with Perkins in control of both ACME and Eastern Division, the Eastern Division will be folded into ACME's control. I don't think Albertsons will close any D.C./Baltimore stores, though they haven't seen much activity lately (then again, with opportunities presented, the Shoppers locations probably weren't that attractive, nor was Mars).

The article points out that Albertsons wanted to close the warehouse four years ago...I looked it up and it was just as I remembered, it was C&S that wanted to close it (C&S operated the D.C.) as they were affected from the bankruptcy of A&P.
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Re: Albertsons closing MD Safeway distribution center

Post by rwsandiego »

This really does make sense. VONS and Ralphs use their LA county distribution centers to serve San Diego and they are about the same distance from SD as the ACME center is from Prince George's County. I feel bad for the workers, but if Alberstons can find a buyer who can hire the workers then it is a win-win. Of course, a new buyer could offer lower wages and fewer benefits, which would suck.
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Re: Albertsons closing MD Safeway distribution center

Post by storewanderer »

The previous distribution center closure in 2016 was a problem because at that time Acme was still on Supervalu systems and I think that warehouse in PA may have still been under Supervalu too...

I am not surprised they are closing this.

It will be interesting to see what happens. Acme is not merchandised like Safeway; it has different fresh items and a much larger center store mix.

Albertsons has been using sale-leaseback type transactions to provide it cash flow for a number of quarters lately. What they are doing with the proceeds (price cuts, new stores, some debt pay downs) seems to be overwhelmingly positive. Still, I am not sure what happens when you no longer have assets to sell off and now you are dealing with lease/rent costs that you previously did not deal with when you owned more of your facilities.
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Re: Albertsons closing MD Safeway distribution center

Post by pseudo3d »

storewanderer wrote: January 30th, 2020, 11:10 pm Albertsons has been using sale-leaseback type transactions to provide it cash flow for a number of quarters lately. What they are doing with the proceeds (price cuts, new stores, some debt pay downs) seems to be overwhelmingly positive. Still, I am not sure what happens when you no longer have assets to sell off and now you are dealing with lease/rent costs that you previously did not deal with when you owned more of your facilities.
They own most of their plants and I'm pretty sure they still hold onto a lot of the valuable Safeway stores in San Francisco and Washington DC. If push ever came to shove they would probably dismantle the manufacturing facilities but they don't seem to be heading that direction.

The idea that Eastern may see consolidation to ACME makes me wonder if the Eastern stores get re-merchandised to be more like ACME, but I'm not sure what the longer range plan for that division is. ACME still wants to get into more of the New York City market (at least the suburbs), and I strongly believe they'll make a move on Fairway's stores that are not in NYC proper (WSJ certainly seems to agree). Meanwhile, the Washington DC and Baltimore markets will probably continue to stagnate, even under ACME.
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Re: Albertsons closing MD Safeway distribution center

Post by buckguy »

I believe this distribution center once belonged to Grand Union, so it may be seen as old and outmoded, although supplying stores from SE Pennsylvania seems like an odd strategy.

FWIW, Acme had a long tenure in DC (20s-80s) but never was a major player. They were a much bigger factor in Baltimore and they had stores in the outer areas East of Baltimore until about a decade ago.
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Re: Albertsons closing MD Safeway distribution center

Post by pseudo3d »

buckguy wrote: February 1st, 2020, 2:50 pm I believe this distribution center once belonged to Grand Union, so it may be seen as old and outmoded, although supplying stores from SE Pennsylvania seems like an odd strategy.

FWIW, Acme had a long tenure in DC (20s-80s) but never was a major player. They were a much bigger factor in Baltimore and they had stores in the outer areas East of Baltimore until about a decade ago.
Safeway built the DC in the late 1990s (link). The old DC was in Landover, and they still have a Landover facility for non-food items (variety/HBA).
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Re: Albertsons closing MD Safeway distribution center

Post by Bagels »

pseudo3d wrote: January 31st, 2020, 7:16 pm
storewanderer wrote: January 30th, 2020, 11:10 pm Albertsons has been using sale-leaseback type transactions to provide it cash flow for a number of quarters lately. What they are doing with the proceeds (price cuts, new stores, some debt pay downs) seems to be overwhelmingly positive. Still, I am not sure what happens when you no longer have assets to sell off and now you are dealing with lease/rent costs that you previously did not deal with when you owned more of your facilities.
They own most of their plants and I'm pretty sure they still hold onto a lot of the valuable Safeway stores in San Francisco and Washington DC. If push ever came to shove they would probably dismantle the manufacturing facilities but they don't seem to be heading that direction.

The idea that Eastern may see consolidation to ACME makes me wonder if the Eastern stores get re-merchandised to be more like ACME, but I'm not sure what the longer range plan for that division is. ACME still wants to get into more of the New York City market (at least the suburbs), and I strongly believe they'll make a move on Fairway's stores that are not in NYC proper (WSJ certainly seems to agree). Meanwhile, the Washington DC and Baltimore markets will probably continue to stagnate, even under ACME.
Before the acquisition, Safeway had begun selling off much of the real estate it owned, and Albertsons has accelerated the process in the last few years. A quick glace at their financial statement shows that the book value of its property & equipment has dropped by about 25%. I'd be curious to know how much property they still own...
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Re: Albertsons closing MD Safeway distribution center

Post by storewanderer »

Bagels wrote: February 2nd, 2020, 3:53 am
pseudo3d wrote: January 31st, 2020, 7:16 pm
storewanderer wrote: January 30th, 2020, 11:10 pm Albertsons has been using sale-leaseback type transactions to provide it cash flow for a number of quarters lately. What they are doing with the proceeds (price cuts, new stores, some debt pay downs) seems to be overwhelmingly positive. Still, I am not sure what happens when you no longer have assets to sell off and now you are dealing with lease/rent costs that you previously did not deal with when you owned more of your facilities.
They own most of their plants and I'm pretty sure they still hold onto a lot of the valuable Safeway stores in San Francisco and Washington DC. If push ever came to shove they would probably dismantle the manufacturing facilities but they don't seem to be heading that direction.

The idea that Eastern may see consolidation to ACME makes me wonder if the Eastern stores get re-merchandised to be more like ACME, but I'm not sure what the longer range plan for that division is. ACME still wants to get into more of the New York City market (at least the suburbs), and I strongly believe they'll make a move on Fairway's stores that are not in NYC proper (WSJ certainly seems to agree). Meanwhile, the Washington DC and Baltimore markets will probably continue to stagnate, even under ACME.
Before the acquisition, Safeway had begun selling off much of the real estate it owned, and Albertsons has accelerated the process in the last few years. A quick glace at their financial statement shows that the book value of its property & equipment has dropped by about 25%. I'd be curious to know how much property they still own...
We will know soon if they try for an IPO again how much property they still own. But it seems like high profile large property sales like this are continuing.

They closed some manufacturing and sold off real estate; WA bread, as I recall. Not sure about any others. A lot of manufacturing went when Canada was sold off too and Joplin Biscult was sold off by Safeway right before the Albertsons acquisition.

Safeway was doing real estate sales toward the end but I don't think their financial situation was as dire as Albertsons has been the past few years... again the biggest problem with Albertsons is its debt and they have been paying some of that down with these sale-leaseback proceeds.
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Re: Albertsons closing MD Safeway distribution center

Post by Bagels »

storewanderer wrote: February 2nd, 2020, 11:04 am We will know soon if they try for an IPO again how much property they still own. But it seems like high profile large property sales like this are continuing.

They closed some manufacturing and sold off real estate; WA bread, as I recall. Not sure about any others. A lot of manufacturing went when Canada was sold off too and Joplin Biscult was sold off by Safeway right before the Albertsons acquisition.

Safeway was doing real estate sales toward the end but I don't think their financial situation was as dire as Albertsons has been the past few years... again the biggest problem with Albertsons is its debt and they have been paying some of that down with these sale-leaseback proceeds.
I agree that Albertsons is selling the real estate for the right reasons (as opposed to its private equity owner robbing its assets). Obviously, it's a gamble, as rents are likely high... this could be a bad thing (some projections have rents dropping by as much as 50% in places like SoCal after Retail Apocalypse peaks ... alternatively, future rent hikes could force the closure of the stores, especially as they age) or good thing. We'll see :).
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