Albertsons announces strategic review of company

[ClownLoach]

Let's turn this completely upside down.

Amazon got a new CEO several months ago.
They just announced tonight that all the non grocery stores will be closing as they've discovered that retail isn't as easy as they thought it would be. Is this only the beginning? Does the new CEO think they need to get back to their roots and just be a straight e-commerce company?

Is this Albertsons strategic review not to downsize the company - but to up size instead? Did they get wind of a potential merger opportunity and decide they want to be the lead bidder?

Could Albertsons, with some new large institutional investors, be lined up to buy the Whole Foods-Amazon Fresh division of Amazon?

Could they also, as the buyer of Amazon's grocery operation, be looking at a mass licensing of their technology such as Just Walk Out? And also a partnership where Albertsons family stores are added to the Amazon app like Fresh and WFM?

Strategic Reviews again take time and don't just sprout up normally. But if Amazon called and asked if there was interest in acquiring WFM/Fresh that would be a hell of a reason to quickly call investment bankers and rally the troops. All of the timing of these events is suspiciously aligned.

I would also say don't look at the upcoming Amazon Style store as a sign of commitment to launching that format either as it clearly was in the works when the new CEO took over. Contrary to popular belief it usually takes a new CEO 6 months to a year before they start making drastic changes. Clearly the new CEO is not happy with these brick and mortar operations. I suspect that they have been shopping WFM/Fresh. That would also explain the rapid acceleration of new store construction, only to stop and mothball the buildings for months. If they were going to just take a loss and kill the money losing Fresh operation that would make sense... Unless it was being bundled with WFM for sale so if it needs to die it does so on someone else's books.

I'm already convinced... WFM has got to be out for sale. Albertsons wants to be the winning buyer. Instead of WFM being sold to a private equity firm outright or a competitor they can engineer a takeover with a PE firm riding along who will have a stake in the combined company when it's all done. And since Kroger is much larger a WFM takeover would be more difficult and probably less worthwhile than a combination with Albertsons.

There is no possible way that Albertsons could do a worse job of operating Whole Foods than Amazon is right now. With just some basic changes they could get years of double digit growth out of Whole Foods, changes that Amazon does not have the institutional knowledge to deliver otherwise they already would have done so.

I'm calling it. I think it's going to be "Amazon to sell WFM and Fresh to Albertsons, who acquires in partnership with [insert name of private equity vultures here]."

There is history to support my theory. Albertsons has wanted to buy Whole Foods and probably would already own it if Amazon hadn't come along.

https://boisedev.com/news/2021/06/01/al ... ds-amazon/

This could also become a bit of a reverse merger and the institutional investor becomes Amazon with a large stake in the newly merged Albertsons-Whole Foods entity. That way they can ensure that the new company is aligned with Amazon buying their technology, etc. and possibly expanding on it. Just Walk Out tech at Albertsons across the nation? Amazon lockers and return desks at every store?

This makes too much sense.

[HCal]

Let's turn this completely upside down.

Amazon got a new CEO several months ago.
They just announced tonight that all the non grocery stores will be closing as they've discovered that retail isn't as easy as they thought it would be. Is this only the beginning? Does the new CEO think they need to get back to their roots and just be a straight e-commerce company?

Is this Albertsons strategic review not to downsize the company - but to up size instead? Did they get wind of a potential merger opportunity and decide they want to be the lead bidder?

Could Albertsons, with some new large institutional investors, be lined up to buy the Whole Foods-Amazon Fresh division of Amazon?

Could they also, as the buyer of Amazon's grocery operation, be looking at a mass licensing of their technology such as Just Walk Out? And also a partnership where Albertsons family stores are added to the Amazon app like Fresh and WFM?

Strategic Reviews again take time and don't just sprout up normally. But if Amazon called and asked if there was interest in acquiring WFM/Fresh that would be a hell of a reason to quickly call investment bankers and rally the troops. All of the timing of these events is suspiciously aligned.

I would also say don't look at the upcoming Amazon Style store as a sign of commitment to launching that format either as it clearly was in the works when the new CEO took over. Contrary to popular belief it usually takes a new CEO 6 months to a year before they start making drastic changes. Clearly the new CEO is not happy with these brick and mortar operations. I suspect that they have been shopping WFM/Fresh. That would also explain the rapid acceleration of new store construction, only to stop and mothball the buildings for months. If they were going to just take a loss and kill the money losing Fresh operation that would make sense... Unless it was being bundled with WFM for sale so if it needs to die it does so on someone else's books.

I'm already convinced... WFM has got to be out for sale. Albertsons wants to be the winning buyer. Instead of WFM being sold to a private equity firm outright or a competitor they can engineer a takeover with a PE firm riding along who will have a stake in the combined company when it's all done. And since Kroger is much larger a WFM takeover would be more difficult and probably less worthwhile than a combination with Albertsons.

There is no possible way that Albertsons could do a worse job of operating Whole Foods than Amazon is right now. With just some basic changes they could get years of double digit growth out of Whole Foods, changes that Amazon does not have the institutional knowledge to deliver otherwise they already would have done so.

I'm calling it. I think it's going to be "Amazon to sell WFM and Fresh to Albertsons, who acquires in partnership with [insert name of private equity vultures here]."

When a company announces a strategic review of this type, it's because they are concerned about the value of their own assets, and are exploring alternatives for their own business. Looking to make an acquisition would be a whole different type of transaction with different investment bankers.

Perhaps Amazon could spin off Whole Foods and then Whole Foods could acquire Albertsons, but I think that's incredibly speculative.

I hate to say it, but my best guess is that the company will be broken up just like Albertsons LLC was in 2006. Some divisions will get sold off to Kroger or regional chains, and Cerberus and company will slowly liquidate what remains. I hope I'm proven wrong though.

[pseudo3d]

Let's turn this completely upside down.

Amazon got a new CEO several months ago.
They just announced tonight that all the non grocery stores will be closing as they've discovered that retail isn't as easy as they thought it would be. Is this only the beginning? Does the new CEO think they need to get back to their roots and just be a straight e-commerce company?

Is this Albertsons strategic review not to downsize the company - but to up size instead? Did they get wind of a potential merger opportunity and decide they want to be the lead bidder?

Could Albertsons, with some new large institutional investors, be lined up to buy the Whole Foods-Amazon Fresh division of Amazon?

Could they also, as the buyer of Amazon's grocery operation, be looking at a mass licensing of their technology such as Just Walk Out? And also a partnership where Albertsons family stores are added to the Amazon app like Fresh and WFM?

Strategic Reviews again take time and don't just sprout up normally. But if Amazon called and asked if there was interest in acquiring WFM/Fresh that would be a hell of a reason to quickly call investment bankers and rally the troops. All of the timing of these events is suspiciously aligned.

I would also say don't look at the upcoming Amazon Style store as a sign of commitment to launching that format either as it clearly was in the works when the new CEO took over. Contrary to popular belief it usually takes a new CEO 6 months to a year before they start making drastic changes. Clearly the new CEO is not happy with these brick and mortar operations. I suspect that they have been shopping WFM/Fresh. That would also explain the rapid acceleration of new store construction, only to stop and mothball the buildings for months. If they were going to just take a loss and kill the money losing Fresh operation that would make sense... Unless it was being bundled with WFM for sale so if it needs to die it does so on someone else's books.

I'm already convinced... WFM has got to be out for sale. Albertsons wants to be the winning buyer. Instead of WFM being sold to a private equity firm outright or a competitor they can engineer a takeover with a PE firm riding along who will have a stake in the combined company when it's all done. And since Kroger is much larger a WFM takeover would be more difficult and probably less worthwhile than a combination with Albertsons.

There is no possible way that Albertsons could do a worse job of operating Whole Foods than Amazon is right now. With just some basic changes they could get years of double digit growth out of Whole Foods, changes that Amazon does not have the institutional knowledge to deliver otherwise they already would have done so.

I'm calling it. I think it's going to be "Amazon to sell WFM and Fresh to Albertsons, who acquires in partnership with [insert name of private equity vultures here]."

Amazon closing the 4 Star/Bookstores (but not the underperforming supermarkets) is definitely a sign of something, and now Albertsons is "exploring strategic alternatives"?

Albertsons has definitely done a lot of expense-cutting in recent years, so this isn't something particularly sudden, either. It's possible that Amazon and Albertsons could be involved in a merger somehow, possibly disconnected from the Amazon.com tentacles and more of a strategic investment. So one plausible scenario is that Amazon buys Cerberus' share of Albertsons Cos. and some of its debt, while selling Albertsons its Amazon Fresh stores and WFM stores. All of the Amazon Fresh stores are in Albertsons' market areas and those get re-flagged as Jewel-Osco or Vons or whatever.

Cerberus gets its exit ticket. Amazon gets to save face by not killing its supermarkets. Albertsons remains public and actually gains stores in the process. Everyone wins!

I doubt Kroger would get involved as unlike in 2006, the companies have even more overlap than before. The only exceptions would be NorCal, the ACME territories of Mid-Atlantic, most of Chicagoland, parts of the Northwest, and the non-Dallas parts of South/United. None of them except maybe NorCal are worth particularly much, and NorCal won't be sold.

[ClownLoach]

Let's turn this completely upside down.

Amazon got a new CEO several months ago.
They just announced tonight that all the non grocery stores will be closing as they've discovered that retail isn't as easy as they thought it would be. Is this only the beginning? Does the new CEO think they need to get back to their roots and just be a straight e-commerce company?

Is this Albertsons strategic review not to downsize the company - but to up size instead? Did they get wind of a potential merger opportunity and decide they want to be the lead bidder?

Could Albertsons, with some new large institutional investors, be lined up to buy the Whole Foods-Amazon Fresh division of Amazon?

Could they also, as the buyer of Amazon's grocery operation, be looking at a mass licensing of their technology such as Just Walk Out? And also a partnership where Albertsons family stores are added to the Amazon app like Fresh and WFM?

Strategic Reviews again take time and don't just sprout up normally. But if Amazon called and asked if there was interest in acquiring WFM/Fresh that would be a hell of a reason to quickly call investment bankers and rally the troops. All of the timing of these events is suspiciously aligned.

I would also say don't look at the upcoming Amazon Style store as a sign of commitment to launching that format either as it clearly was in the works when the new CEO took over. Contrary to popular belief it usually takes a new CEO 6 months to a year before they start making drastic changes. Clearly the new CEO is not happy with these brick and mortar operations. I suspect that they have been shopping WFM/Fresh. That would also explain the rapid acceleration of new store construction, only to stop and mothball the buildings for months. If they were going to just take a loss and kill the money losing Fresh operation that would make sense... Unless it was being bundled with WFM for sale so if it needs to die it does so on someone else's books.

I'm already convinced... WFM has got to be out for sale. Albertsons wants to be the winning buyer. Instead of WFM being sold to a private equity firm outright or a competitor they can engineer a takeover with a PE firm riding along who will have a stake in the combined company when it's all done. And since Kroger is much larger a WFM takeover would be more difficult and probably less worthwhile than a combination with Albertsons.

There is no possible way that Albertsons could do a worse job of operating Whole Foods than Amazon is right now. With just some basic changes they could get years of double digit growth out of Whole Foods, changes that Amazon does not have the institutional knowledge to deliver otherwise they already would have done so.

I'm calling it. I think it's going to be "Amazon to sell WFM and Fresh to Albertsons, who acquires in partnership with [insert name of private equity vultures here]."

When a company announces a strategic review of this type, it's because they are concerned about the value of their own assets, and are exploring alternatives for their own business. Looking to make an acquisition would be a whole different type of transaction with different investment bankers.

Perhaps Amazon could spin off Whole Foods and then Whole Foods could acquire Albertsons, but I think that's incredibly speculative.

I hate to say it, but my best guess is that the company will be broken up just like Albertsons LLC was in 2006. Some divisions will get sold off to Kroger or regional chains, and Cerberus and company will slowly liquidate what remains. I hope I'm proven wrong though.

I'll politely disagree having been through the strategic review process where the outcome was acquisition of two competitors in a one year period.

[ClownLoach]

Let's turn this completely upside down.

Amazon got a new CEO several months ago.
They just announced tonight that all the non grocery stores will be closing as they've discovered that retail isn't as easy as they thought it would be. Is this only the beginning? Does the new CEO think they need to get back to their roots and just be a straight e-commerce company?

Is this Albertsons strategic review not to downsize the company - but to up size instead? Did they get wind of a potential merger opportunity and decide they want to be the lead bidder?

Could Albertsons, with some new large institutional investors, be lined up to buy the Whole Foods-Amazon Fresh division of Amazon?

Could they also, as the buyer of Amazon's grocery operation, be looking at a mass licensing of their technology such as Just Walk Out? And also a partnership where Albertsons family stores are added to the Amazon app like Fresh and WFM?

Strategic Reviews again take time and don't just sprout up normally. But if Amazon called and asked if there was interest in acquiring WFM/Fresh that would be a hell of a reason to quickly call investment bankers and rally the troops. All of the timing of these events is suspiciously aligned.

I would also say don't look at the upcoming Amazon Style store as a sign of commitment to launching that format either as it clearly was in the works when the new CEO took over. Contrary to popular belief it usually takes a new CEO 6 months to a year before they start making drastic changes. Clearly the new CEO is not happy with these brick and mortar operations. I suspect that they have been shopping WFM/Fresh. That would also explain the rapid acceleration of new store construction, only to stop and mothball the buildings for months. If they were going to just take a loss and kill the money losing Fresh operation that would make sense... Unless it was being bundled with WFM for sale so if it needs to die it does so on someone else's books.

I'm already convinced... WFM has got to be out for sale. Albertsons wants to be the winning buyer. Instead of WFM being sold to a private equity firm outright or a competitor they can engineer a takeover with a PE firm riding along who will have a stake in the combined company when it's all done. And since Kroger is much larger a WFM takeover would be more difficult and probably less worthwhile than a combination with Albertsons.

There is no possible way that Albertsons could do a worse job of operating Whole Foods than Amazon is right now. With just some basic changes they could get years of double digit growth out of Whole Foods, changes that Amazon does not have the institutional knowledge to deliver otherwise they already would have done so.

I'm calling it. I think it's going to be "Amazon to sell WFM and Fresh to Albertsons, who acquires in partnership with [insert name of private equity vultures here]."

Amazon closing the 4 Star/Bookstores (but not the underperforming supermarkets) is definitely a sign of something, and now Albertsons is "exploring strategic alternatives"?

Albertsons has definitely done a lot of expense-cutting in recent years, so this isn't something particularly sudden, either. It's possible that Amazon and Albertsons could be involved in a merger somehow, possibly disconnected from the Amazon.com tentacles and more of a strategic investment. So one plausible scenario is that Amazon buys Cerberus' share of Albertsons Cos. and some of its debt, while selling Albertsons its Amazon Fresh stores and WFM stores. All of the Amazon Fresh stores are in Albertsons' market areas and those get re-flagged as Jewel-Osco or Vons or whatever.

Cerberus gets its exit ticket. Amazon gets to save face by not killing its supermarkets. Albertsons remains public and actually gains stores in the process. Everyone wins!

I doubt Kroger would get involved as unlike in 2006, the companies have even more overlap than before. The only exceptions would be NorCal, the ACME territories of Mid-Atlantic, most of Chicagoland, parts of the Northwest, and the non-Dallas parts of South/United. None of them except maybe NorCal are worth particularly much, and NorCal won't be sold.

Only reason I mentioned Kroger is that they would not get as much value if they were to go out and try to acquire Whole Foods/Fresh from Amazon. But I could see them trying anyway to spite Albertsons Cos.

Another serious threat would be if Target wanted to make a run at acquiring WFM. Target and Amazon have been linked many times, not only by armchair speculators on this board but also by Wall Street pundits who believe they should be working together.

It could also be true that Albertsons might want to unload problematic divisions on other operators if they can for extra capital. Also if they can acquire WFM their arms will be full and they will not need other distractions. Despite NorCal being the profit center I have always believed that they neglect the market and now we see sudden CapEx to right the ship and get the stores current and refreshed. Again sounds like getting a project out of the way to allow for them to concentrate on other initiatives.

[veteran+]

Oh hell no...
https://www.bizjournals.com/cincinnati/ ... ition.html
Kroger has already dumbed down Ralphs in SoCal. They are Kroger in all but name at this point. If Albertsons is purchased by Kroger, I will do much less of my shopping there.
I just hope some foreign company like Loblaws or Sainsbury saves Albertsons if they are fully up for sale. Hell, having Tesco buy them would be better than letting Albertsons collapse like Kmart.

Being logical, I could see Albertsons selling off its parking lot gas stations.
Albertsons should give up on Randalls and put that chain out of its misery. They are #4 in Austin and Houston (in Austin, they have lower share than Costco).

If I am being negative and jumping to bad conclusions in this topic, I am sorry.

Be careful what you ask for regarding Tesco................................................

They would be a worse nightmare than Lampert.

Trust me

[veteran+]

Most of these scenarios are possible but few would be successful and beneficial to the employee nor the customer.

I believe WF is being destroyed by Amazon little by little. This chain is making less and less sense to me. Albertsons could be better, but they are not known to nurture and improve "brands". The list is endless!

What would be better (not likely to happen) is if a white knight came to the rescue (who believed in the concept) and saved WF from these ignorant corporate and investment folks.

Albertsons? I long for the days of "Joe Albertson", but that has been totally erased!

[ClownLoach]

Most of these scenarios are possible but few would be successful and beneficial to the employee not the customer.

I believe WF is being destroyed by Amazon little by little. This chain is making less and less sense to me. Albertsons could be better, but they are not known to nurture and improve "brands". The list is endless!

What would be better (not likely to happen) is if a white knight came to the rescue (who believed in the concept) and saved WF from these ignorant corporate and investment folks.

Albertsons? I long for the days of "Joe Albertson", but that has been totally erased!

It has been no secret that Amazon has heavily poached leadership from Target for their grocery operations in recent years. Target still has no idea how to operate fresh operations unless the items are prepackaged with a date stamp on them. These same folks are replacing all the long term leaders WFM had in place that left because they didn't like the changes. They are clueless about basics like date rotation, stocking and culling of produce, etc. Their lack of expertise in operating full service grocery stores is the reason WFM has become extremely inconsistent from store to store which has to be swinging revenue and profit figures violently.

Albertsons could fix these extreme basics in no time at all just by installing real grocery store operating models. I agree Amazon is destroying WFM and has been clueless in launching Fresh. They need a grocery store operator to run these... grocery stores.
The low hanging fruit at WFM these days is everywhere.

[veteran+]

Agreed but I am speaking to the track record of Safeway's combined with the current Albertsons' method of managing upscale monikers.

Consider the disappeared cachet of Pavilions, Bristol Farms and many others (historically and more recently).

Kroger has done the same thing.

[ClownLoach]

Agreed but I am speaking to the track record of Safeway's combined with the current Albertsons' method of managing upscale monikers.

Consider the disappeared cachet of Pavilions, Bristol Farms and many others (historically and more recently).

Kroger has done the same thing.

I don't think Bristol Farms was in a good place when they were bought. I discussed in another thread that they have had a historical success rate of only 50%. It seems that they have finally found their niche only recently with their newer format which is 30% smaller, cheaper design (although I think it looks better than anything they've done before), and basically is a Lazy Acres with more upscale assortment. It really is a clone of MetropolitanMarket from Seattle which is now their sister company. They still seem to lack the capital needed to finish remodeling the rest of the chain to the new format. I am not sure Albertsons could be blamed entirely for their failure as they tried to expand what they were given - a deteriorating operation that had not picked up the trend of "Whole Foods" style organics and nutritionals yet.

I would argue they have dramatically changed Pavilions for the better. Under Safeway these had become Vons with a different sign. Literally no difference in any way on new build stores like Balboa which opened with standard Safeway lifestyle interior. They have revived the brand, given it a new and unique format and messaging again, and are actively expanding it.

The Pavilions revival is more recent and I believe that it is more indicative of their ability to better diversify and operate upscale formats.

Just for fun I read multiple company announcements from various industries about strategic review announcements. There are clearly two versions. One is the type here that discusses maximizing growth of the company to increase value. The other type is negative and discusses alternatives such as sales, closures, liquidations, asset disposals, layoffs and expense reductions. The Albertsons announcement was of the first type, positive and focused on growth. Their Financials are stable and they continue to exceed Wall Street expectations on a regular basis. They are not likely to grow earnings by hacking up the company. Sale or closure of problematic divisions like Houston does not require the hiring of expensive investment banker services. So their intent is to do something big here. I would also expect that Cerberus wants out because the hedge funds sell during times of interest rate increases - they do not buy - they do like to loan money at higher rates though. So they are very unlikely to be acquired by a private equity company or hedge fund. When rates were at rock bottom last year we saw many private equity acquisitions.