Albertsons announces strategic review of company

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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.
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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.
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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...
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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...
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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.
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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.
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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.
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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.
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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.
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Re: Albertsons announces strategic review of company

Post by marketreportblog »

Not sure if this is the place for it, but how's Albertsons doing in other regions of the country? I'm just curious what's going on in other divisions that I don't get to observe on the ground all the time.

I'm in northern New Jersey, and the very rapid renovations that were sweeping through the ACME chain in 2020-21 are all but done. As far as I can tell, there are no renovations going on currently and very few in the last six months or so. There are only a handful of ACMEs without Quality Built (or Heritage, as I see it more frequently called on here), but those don't seem to be getting much attention. There are also a few that have gotten the renovation, but are still very old stores. They end up having beat-up refrigerators, scratched floors, burnt out lights, and poorly repurposed displays (like a cake case labeled with Special Occasion Cakes but stocked with coffee, which I observed today), but freshly painted walls and aisle markers. Meanwhile, the Kings stores have been getting some fixture upgrades, like new produce cases, new refrigerators in the deli departments, new bread cases, new lighting. It feels to me like in Mid-Atlantic, they've kind of decided they're done with ACME and are moving onto Kings now. Notably, there are no decor changes in any of the Kings stores, yet. The Millburn store had some construction done, with a wall removed and new flooring in the produce department. The Livingston Kings had a liquor store that closed in 2020, which apparently is supposed to become a kosher department. That construction is moving along, but again, nothing else is being done around the store. Some of the ACMEs could stand to get some of the upgrades the Kings are getting -- like lighting and produce cases.

Not sure what's been going on with Safeway East, since again I don't have eyes on that part of division. It's been a couple months since I've seen any of the Shaw's, but my impression is that more of the Shaw's have gotten renovations than the ACMEs. But I also get the sense that the Shaw's stores tend to be newer and nicer buildings than the northern NJ ACMEs (most of which, of course, were inherited from A&P). The Star Markets for sure have had more extensive and more recent renovations than the Kings, if we compare the two divisions' higher-end banners.

So what's going on with the other divisions as far as renovations and new stores? Are other divisions similarly stalled, or are we just kind of unlucky right now in Mid-Atlantic?
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