Kroger to merge with Albertsons?

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Re: Kroger to merge with Albertsons?

Post by retailfanmitchell019 »

ClownLoach wrote: March 16th, 2023, 10:18 pm Fresh from the farm, a new shipment of steer manure has been plopped on our favorite website, Pravda krogeralbertsons.com

"The market for groceries is the latest to grab headlines for what is both normal and heathy: dynamic responses to an evolving economic landscape. Recession, inflation, and new consumer patterns with online ordering and home delivery means suppliers must adapt or stagnate. How companies configure themselves is just one form of adaptation and we should cheer the experimentation and ward off political opportunism that would control or direct how private capital reacts to a changing world."

Kent Lassman

Competitive Enterprise Institute, President and CEO
"We're desperate, get used to it, it's merge or we get killed"- Kroger/Albertsons :lol: :lol: :lol:
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If you've watched Decline of Western Civilzation, you'll get my reference. ;)
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Re: Kroger to merge with Albertsons?

Post by ClownLoach »

ClownLoach wrote: March 16th, 2023, 10:18 pm Fresh from the farm, a new shipment of steer manure has been plopped on our favorite website, Pravda krogeralbertsons.com

Apparently if this merger happens then everyone everywhere is going to start hiring! A job for you, and a job for you, and a job for you! Jobs everywhere!

"If this merger turns out to increase the productivity of the grocery business, and the food products business in the U.S., that's going to lead to a net increase in jobs across all sectors in the U.S."
Steven Peterson

University of Idaho, Associate Clinical Professor of Economics

And here is more propaganda another expert opinion from a CEO who hasn't seen the latest spell check technology. We need to cheer on this greed experimentation!

"The market for groceries is the latest to grab headlines for what is both normal and heathy: dynamic responses to an evolving economic landscape. Recession, inflation, and new consumer patterns with online ordering and home delivery means suppliers must adapt or stagnate. How companies configure themselves is just one form of adaptation and we should cheer the experimentation and ward off political opportunism that would control or direct how private capital reacts to a changing world."

Kent Lassman

Competitive Enterprise Institute, President and CEO
On the website they have also posted statements about two specific states, California and Colorado, and they promise for both "No exceptions, no excuses. Kroger will not close any stores, distribution centers, or manufacturing plants as a result of this merger." And "Kroger will not lay off any frontline associates as a result of this merger."

For some reason or another they seem that they want to battle in both of those states for this merger. Wonder why they won't make similar promises to the other states?
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Re: Kroger to merge with Albertsons?

Post by storewanderer »

ClownLoach wrote: March 16th, 2023, 10:18 pm Fresh from the farm, a new shipment of steer manure has been plopped on our favorite website, Pravda krogeralbertsons.com

Apparently if this merger happens then everyone everywhere is going to start hiring! A job for you, and a job for you, and a job for you! Jobs everywhere!

"If this merger turns out to increase the productivity of the grocery business, and the food products business in the U.S., that's going to lead to a net increase in jobs across all sectors in the U.S."
Steven Peterson

University of Idaho, Associate Clinical Professor of Economics

And here is more propaganda another expert opinion from a CEO who hasn't seen the latest spell check technology. We need to cheer on this greed experimentation!

"The market for groceries is the latest to grab headlines for what is both normal and heathy: dynamic responses to an evolving economic landscape. Recession, inflation, and new consumer patterns with online ordering and home delivery means suppliers must adapt or stagnate. How companies configure themselves is just one form of adaptation and we should cheer the experimentation and ward off political opportunism that would control or direct how private capital reacts to a changing world."

Kent Lassman

Competitive Enterprise Institute, President and CEO
Oh man, this is some good stuff.

Who can possibly buy off on this? Doesn't everyone know one of the biggest reasons to do a merger in the first place is to eliminate duplicate positions (save money) - that is a huge part of the whole synergy thing. Sure they can save some money by being bigger and demanding lower prices from suppliers (the suppliers will probably have to cut jobs to make up for the price cuts) so there is that part of the synergy too. Tough to understand what paths here lead to more jobs.

Perhaps they can elaborate on exactly what paths here lead to more jobs. For instance, what specific additional people will be hired and what will their jobs be?
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Re: Kroger to merge with Albertsons?

Post by storewanderer »

ClownLoach wrote: March 16th, 2023, 10:28 pm
On the website they have also posted statements about two specific states, California and Colorado, and they promise for both "No exceptions, no excuses. Kroger will not close any stores, distribution centers, or manufacturing plants as a result of this merger." And "Kroger will not lay off any frontline associates as a result of this merger."

For some reason or another they seem that they want to battle in both of those states for this merger. Wonder why they won't make similar promises to the other states?
What is odd about California is the overlap is only in SoCal and I do not really think it is that severe. I really think they could broker a deal to just divest Food 4 Less and not much else.

Colorado has very serious overlap. I think in the previous Albertsons/Safeway merger the stores that needed to be divested were performing so poorly that they couldn't give them away and they managed to make a deal to not have to divest anything.

I am getting the feeling they want to ram this thing through ahead of schedule. It kind of makes sense- the longer it goes on, the more time the opposition has to organize.

I also enjoy the disclaimers on their statements:
"No exceptions, no excuses. Kroger will not close any stores, distribution centers, or manufacturing plants as a result of this merger." What does that mean? If you have a poorly performing store you close it because it is poorly performing, not because of the merger. If you have a manufacturing plant or distribution center that is running under desired capacity, you close it for that reason, not because of the merger.

And "Kroger will not lay off any frontline associates as a result of this merger." What does that mean? People in the store? What about district/regional? What about distribution center? Truck driver? All the backstage positions. Division office? Private label division?
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Re: Kroger to merge with Albertsons?

Post by mjhale »

retailfanmitchell019 wrote: March 16th, 2023, 10:25 pm "We're desperate, get used to it, it's merge or we get killed"- Kroger/Albertsons :lol: :lol: :lol:
Sounds an awful lot like the we are too big to fail statements made about the banks during the 2008 banking crisis. This whole merger seems to be about paying back private equity involved with Albertsons and somehow saving traditional grocers from Amazon (lol on their grocery stores) and Walmart. What good does it do when competition goes from two to one when both grocery stores in town are owned by Kroger or Albertsons? And outside of the west where there seems to be a viable buyer for duplicate stores (I'm speaking of Save Mart from what I'm reading here) who has the long term viability to operate large chunks of stores that have to be sold because of the merger? Do any of the regionals want a big chunk of stores like that? And in areas with competitive grocery markets does anyone care? I'm lucky to have a lot of choice in grocers where I live. If Safeway went away I would miss the bakery but beyond that they have the same stuff as elsewhere but at much higher prices. And Harris Teeter is a waste. Too expensive and nothing different to want me to shop there. Lastly, outside the area where Kroger promises not to close stores or lay people off what is the story there? Make the up for what you promised not to lay off or close in area x, just do it in area y. It is no wonder the opposition to this merger is growing. Every time some new wrinkle comes up it generates more questions that make this out to be great for the company and not so good for consumers and non-management employees.
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Re: Kroger to merge with Albertsons?

Post by ClownLoach »

mjhale wrote: March 18th, 2023, 10:08 am
retailfanmitchell019 wrote: March 16th, 2023, 10:25 pm "We're desperate, get used to it, it's merge or we get killed"- Kroger/Albertsons :lol: :lol: :lol:
Sounds an awful lot like the we are too big to fail statements made about the banks during the 2008 banking crisis. This whole merger seems to be about paying back private equity involved with Albertsons and somehow saving traditional grocers from Amazon (lol on their grocery stores) and Walmart. What good does it do when competition goes from two to one when both grocery stores in town are owned by Kroger or Albertsons? And outside of the west where there seems to be a viable buyer for duplicate stores (I'm speaking of Save Mart from what I'm reading here) who has the long term viability to operate large chunks of stores that have to be sold because of the merger? Do any of the regionals want a big chunk of stores like that?
I think you have it right here.

There may be a tiny speck of truth to the seemingly bizarre statements about Kroger and Albertsons somehow being at risk if they cannot merge while keeping as many stores as possible.

The speck of truth is around the elephants in the room: the significant amounts of debt carried by Kroger and Albertsons. The fact is that if either one suffered a credit crunch from a factoring bank going belly up (hello, Credit Suisse?) they would probably struggle to line up quite as much of a credit line as they might want.

Enter Apollo. They get involved in Albertsons by buying a stake then brokering a deal. I am sure the rotten smell of this deal is the slimy tentacles of Apollo's debt brokers. My bet is that they have offered to backstop merged Kroger debt and possibly refinance it on better terms than they could get from the outside credit market. Apollo profits because they love to peddle debt and collect interest.

Suddenly you have a good reason for Kroger to want to get involved in a deal where it seems like they're on the losing end. Easier access to debt and possibly better interest rates which could mean fatter profits without doing anything else, without cutting jobs or closing facilities. Make cuts elsewhere in combination with the merger and now it's a big profit booster for Kroger.

I really think this is the real reason for this deal. Apollo is the engine pulling the debt train into Kroger station.

As far as the regional stores go, I've asked this question since the beginning. Why should they have to spend their money to help subsidize this deal? Because if they are needed to buy stores, even if they are sold for a dollar each, they are still having to invest in them. They still have to spend their available cash (or borrow from an available lender... Hello, Apollo?). Why should they have to get involved? It's a pretty arrogant assumption on Kroger and Albertsons behalf to think that they can merge with the help of their competitors who (with the possible exception of Save Mart) will be financially worse off as a result? What if they are perfectly happy as they are? If the FTC says something like "You must divest these ten Ralphs, five Vons and eight Albertsons to Stater Bros." do they have to take the stores? (Reason I say that is it seemed like stores divested in the Lucky-Albertsons deal weren't all big hits for Stater and others). It's just pretty arrogant all around because there isn't any way they didn't know going into this that their deal would somehow force open the wallets of their competitors, almost like an added bonus for the combined entity.
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Re: Kroger to merge with Albertsons?

Post by arizonaguy »

ClownLoach wrote: March 16th, 2023, 10:28 pm
ClownLoach wrote: March 16th, 2023, 10:18 pm Fresh from the farm, a new shipment of steer manure has been plopped on our favorite website, Pravda krogeralbertsons.com

Apparently if this merger happens then everyone everywhere is going to start hiring! A job for you, and a job for you, and a job for you! Jobs everywhere!

"If this merger turns out to increase the productivity of the grocery business, and the food products business in the U.S., that's going to lead to a net increase in jobs across all sectors in the U.S."
Steven Peterson

University of Idaho, Associate Clinical Professor of Economics

And here is more propaganda another expert opinion from a CEO who hasn't seen the latest spell check technology. We need to cheer on this greed experimentation!

"The market for groceries is the latest to grab headlines for what is both normal and heathy: dynamic responses to an evolving economic landscape. Recession, inflation, and new consumer patterns with online ordering and home delivery means suppliers must adapt or stagnate. How companies configure themselves is just one form of adaptation and we should cheer the experimentation and ward off political opportunism that would control or direct how private capital reacts to a changing world."

Kent Lassman

Competitive Enterprise Institute, President and CEO
On the website they have also posted statements about two specific states, California and Colorado, and they promise for both "No exceptions, no excuses. Kroger will not close any stores, distribution centers, or manufacturing plants as a result of this merger." And "Kroger will not lay off any frontline associates as a result of this merger."

For some reason or another they seem that they want to battle in both of those states for this merger. Wonder why they won't make similar promises to the other states?
The key is "as a result of this merger." It's very easy to say that "this store was not profitable for a long time" and that is why it is closing.

I also find it interesting Arizona wasn't mentioned as the Arizona AG is strongly opposed to my merger. My uneducated guess is that they probably have a buyer lined up for the Albertsons/Safeway Southwest division (probably Save Mart).
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Re: Kroger to merge with Albertsons?

Post by mjhale »

ClownLoach wrote: March 18th, 2023, 1:39 pm
mjhale wrote: March 18th, 2023, 10:08 am
retailfanmitchell019 wrote: March 16th, 2023, 10:25 pm "We're desperate, get used to it, it's merge or we get killed"- Kroger/Albertsons :lol: :lol: :lol:
Sounds an awful lot like the we are too big to fail statements made about the banks during the 2008 banking crisis. This whole merger seems to be about paying back private equity involved with Albertsons and somehow saving traditional grocers from Amazon (lol on their grocery stores) and Walmart. What good does it do when competition goes from two to one when both grocery stores in town are owned by Kroger or Albertsons? And outside of the west where there seems to be a viable buyer for duplicate stores (I'm speaking of Save Mart from what I'm reading here) who has the long term viability to operate large chunks of stores that have to be sold because of the merger? Do any of the regionals want a big chunk of stores like that?
I think you have it right here.

There may be a tiny speck of truth to the seemingly bizarre statements about Kroger and Albertsons somehow being at risk if they cannot merge while keeping as many stores as possible.

The speck of truth is around the elephants in the room: the significant amounts of debt carried by Kroger and Albertsons. The fact is that if either one suffered a credit crunch from a factoring bank going belly up (hello, Credit Suisse?) they would probably struggle to line up quite as much of a credit line as they might want.

Enter Apollo. They get involved in Albertsons by buying a stake then brokering a deal. I am sure the rotten smell of this deal is the slimy tentacles of Apollo's debt brokers. My bet is that they have offered to backstop merged Kroger debt and possibly refinance it on better terms than they could get from the outside credit market. Apollo profits because they love to peddle debt and collect interest.

Suddenly you have a good reason for Kroger to want to get involved in a deal where it seems like they're on the losing end. Easier access to debt and possibly better interest rates which could mean fatter profits without doing anything else, without cutting jobs or closing facilities. Make cuts elsewhere in combination with the merger and now it's a big profit booster for Kroger.

I really think this is the real reason for this deal. Apollo is the engine pulling the debt train into Kroger station.

As far as the regional stores go, I've asked this question since the beginning. Why should they have to spend their money to help subsidize this deal? Because if they are needed to buy stores, even if they are sold for a dollar each, they are still having to invest in them. They still have to spend their available cash (or borrow from an available lender... Hello, Apollo?). Why should they have to get involved? It's a pretty arrogant assumption on Kroger and Albertsons behalf to think that they can merge with the help of their competitors who (with the possible exception of Save Mart) will be financially worse off as a result? What if they are perfectly happy as they are? If the FTC says something like "You must divest these ten Ralphs, five Vons and eight Albertsons to Stater Bros." do they have to take the stores? (Reason I say that is it seemed like stores divested in the Lucky-Albertsons deal weren't all big hits for Stater and others). It's just pretty arrogant all around because there isn't any way they didn't know going into this that their deal would somehow force open the wallets of their competitors, almost like an added bonus for the combined entity.
Another private equity getting involved? Interesting. Doesn't this just put us in a cycle of each private equity wanting their payout when the time comes? Certainly Apollo, like Cerberus, is going to want their payday for investing in and facilitating these deals if they do get involved. If the merger goes through, the next time around there will be one less grocery competitor out there if payday means selling stores at (hopefully) a profit. Who is going to be buying then? I'd expect the FTC would restrict the surviving corporate entity of the current merger attempt from opening/buying stores in overlap areas for x amount of time. Walmart isn't going to want grocery only. Amazon's non Whole Foods grocery looks like a disaster. Publix maybe? They seem like they want to grow. The rest of the grocery operators ought to stay out of this. Focus on your own operations and not finance someone else's as you say. Unless there are hush hush, NDA-style side deals going on I think it is interesting that we aren't hearing about other operators on their own accord or with the help of local entities to preserve stores being interested in potentially overlapping stores especially outside of the west coast areas. Maybe no one is interested. Maybe someone is but as we've both said, Who?
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Re: Kroger to merge with Albertsons?

Post by ClownLoach »

mjhale wrote: March 18th, 2023, 6:57 pm
ClownLoach wrote: March 18th, 2023, 1:39 pm
mjhale wrote: March 18th, 2023, 10:08 am

Sounds an awful lot like the we are too big to fail statements made about the banks during the 2008 banking crisis. This whole merger seems to be about paying back private equity involved with Albertsons and somehow saving traditional grocers from Amazon (lol on their grocery stores) and Walmart. What good does it do when competition goes from two to one when both grocery stores in town are owned by Kroger or Albertsons? And outside of the west where there seems to be a viable buyer for duplicate stores (I'm speaking of Save Mart from what I'm reading here) who has the long term viability to operate large chunks of stores that have to be sold because of the merger? Do any of the regionals want a big chunk of stores like that?
I think you have it right here.

There may be a tiny speck of truth to the seemingly bizarre statements about Kroger and Albertsons somehow being at risk if they cannot merge while keeping as many stores as possible.

The speck of truth is around the elephants in the room: the significant amounts of debt carried by Kroger and Albertsons. The fact is that if either one suffered a credit crunch from a factoring bank going belly up (hello, Credit Suisse?) they would probably struggle to line up quite as much of a credit line as they might want.

Enter Apollo. They get involved in Albertsons by buying a stake then brokering a deal. I am sure the rotten smell of this deal is the slimy tentacles of Apollo's debt brokers. My bet is that they have offered to backstop merged Kroger debt and possibly refinance it on better terms than they could get from the outside credit market. Apollo profits because they love to peddle debt and collect interest.

Suddenly you have a good reason for Kroger to want to get involved in a deal where it seems like they're on the losing end. Easier access to debt and possibly better interest rates which could mean fatter profits without doing anything else, without cutting jobs or closing facilities. Make cuts elsewhere in combination with the merger and now it's a big profit booster for Kroger.

I really think this is the real reason for this deal. Apollo is the engine pulling the debt train into Kroger station.

As far as the regional stores go, I've asked this question since the beginning. Why should they have to spend their money to help subsidize this deal? Because if they are needed to buy stores, even if they are sold for a dollar each, they are still having to invest in them. They still have to spend their available cash (or borrow from an available lender... Hello, Apollo?). Why should they have to get involved? It's a pretty arrogant assumption on Kroger and Albertsons behalf to think that they can merge with the help of their competitors who (with the possible exception of Save Mart) will be financially worse off as a result? What if they are perfectly happy as they are? If the FTC says something like "You must divest these ten Ralphs, five Vons and eight Albertsons to Stater Bros." do they have to take the stores? (Reason I say that is it seemed like stores divested in the Lucky-Albertsons deal weren't all big hits for Stater and others). It's just pretty arrogant all around because there isn't any way they didn't know going into this that their deal would somehow force open the wallets of their competitors, almost like an added bonus for the combined entity.
Another private equity getting involved? Interesting. Doesn't this just put us in a cycle of each private equity wanting their payout when the time comes? Certainly Apollo, like Cerberus, is going to want their payday for investing in and facilitating these deals if they do get involved. If the merger goes through, the next time around there will be one less grocery competitor out there if payday means selling stores at (hopefully) a profit. Who is going to be buying then? I'd expect the FTC would restrict the surviving corporate entity of the current merger attempt from opening/buying stores in overlap areas for x amount of time. Walmart isn't going to want grocery only. Amazon's non Whole Foods grocery looks like a disaster. Publix maybe?
We don't have another private equity just jumping in, Apollo Global Management has been involved for a few years now with different intentions vs other PE firms.

Apollo is a different breed. I didn't know they had bought a good size chunk of Albertsons back in 2020, it was kept pretty quiet. I believe they are the agitator that wanted deals to be made, not necessarily Cerberus. Apollo is a debt peddler and as such they have many motives for involvement. They aren't a "corporate flipper" like Cerberus, Bain, etc.

Apollo's goal is to get involved and refinance the debts in such a manner that they get a chunk (if not all) of the interest. So even when they sell they're still getting a check. A recent example of a company they've sunk their teeth into is Michaels; they reportedly reloaded them with tons of debt and if you've seen their stores lately they aren't pretty - zero service, 100% self checkout being rolled out, poor store maintenance and generally scaled back offerings coupled with big price increases and less of their famous coupons. They definitely have become a shadow of themselves in just a couple of years of Apollo ownership and even if they sell it to someone who cares later they'll still owe Apollo for the debt.

Apollo can "make themselves useful" to everyone involved in an Albertsons-Kroger deal. They'll get paid back for their investment in Albertsons. I'm going to assume that they are lined up to be a financier for Kroger if the merger goes through. They'll probably keep a stake in Kroger. They'll be available for anyone who needs financing to purchase divested stores - or maybe they'll swap equity for the funding? The end result is they make a lot of money from multiple angles if the merger goes through. And if it doesn't go through as is they'll find a way to broker other deals where they can profit from the sale or breakup of the company.

As far as Publix goes - I'm not so sure they would want to expand out of their core territory. They seem to be able to run 1000+ stores in and around Florida where I would assume Kroger or any other chain would prefer to run 60% fewer units in the same area. They are fervently anti Union. The union aspect makes any divestitures to them a no-go. If this merger does actually go through I would expect to see zero sales of union stores to non union operators, and in fact any non union store will probably be organized as a concession to get them to back down their opposition. And I just don't feel like they are all that great either. They have a store practically on every corner in Florida, some cases practically across the street from each other. They have won the war there basically on convenience. They are not even in my Top 10 of overall best supermarkets. I also wonder if they would be opposing this merger behind the scenes because the bigger Kroger gets the smaller Publix becomes to a potential acquirer... If this merger goes through I expect to see a new rush to consolidate the regional operators and build a new national competitor or at least a super-regional; I expect that the Save Mart folks will be the engine behind such activity at least in the Western US, Ahold Delhaize in the East. One or both potentially fueled by Apollo financing or interest if they shed their Kroger shares post merger. But in the long term I don't see Publix ever being an acquirer, rather I see them being acquired instead. So much opportunity to trim store count there and cut costs that a cost cutting focused buyer might see dollar bills in that Publix green.
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Re: Kroger to merge with Albertsons?

Post by storewanderer »

ClownLoach wrote: March 18th, 2023, 11:07 pm

As far as Publix goes - I'm not so sure they would want to expand out of their core territory. They seem to be able to run 1000+ stores in and around Florida where I would assume Kroger or any other chain would prefer to run 60% fewer units in the same area. They are fervently anti Union. The union aspect makes any divestitures to them a no-go. If this merger does actually go through I would expect to see zero sales of union stores to non union operators, and in fact any non union store will probably be organized as a concession to get them to back down their opposition. And I just don't feel like they are all that great either. They have a store practically on every corner in Florida, some cases practically across the street from each other. They have won the war there basically on convenience. They are not even in my Top 10 of overall best supermarkets. I also wonder if they would be opposing this merger behind the scenes because the bigger Kroger gets the smaller Publix becomes to a potential acquirer... If this merger goes through I expect to see a new rush to consolidate the regional operators and build a new national competitor or at least a super-regional; I expect that the Save Mart folks will be the engine behind such activity at least in the Western US, Ahold Delhaize in the East. One or both potentially fueled by Apollo financing or interest if they shed their Kroger shares post merger. But in the long term I don't see Publix ever being an acquirer, rather I see them being acquired instead. So much opportunity to trim store count there and cut costs that a cost cutting focused buyer might see dollar bills in that Publix green.
Isn't Publix an ESOP? I don't think it would be so easy for them to just sell. I don't see Publix selling. Why would they sell? They have built an empire and they steadily grow it. Many customers love Publix. I'm not wowed by them either. If they are in my top 10 of stores, they are going to be somewhere close to 10 if they are there at all. Frankly I would rather shop at Smiths than Publix for a variety of reasons- better mix, way better private label, better pricing, better produce/meat... when there were those random Safeways in FL I was thinking to myself if I lived anywhere near one of these even though they were a dirty mess of a store with high prices but tons of loss leader ad promotions, how many Publix would I drive past to shop there weekly just to be able to shop somewhere other than Publix? Now if I had to pick between Winn Dixie and Publix it is not going to be easy but I suspect I'd be at Publix more often than I'd like to be, but there are some better Winn Dixies out there... I just perceive them generally as higher priced and lower quality than Publix.

I am wondering if Save Mart could roll up some of the regionals in the South too. I am thinking specifically the TX-LA-GA-AL type territory. Not going to name any names but there are a few chains I am thinking of. Cannot believe we are at a cusp of what looks like a potential major expansion for Save Mart. But I also never expected them to bring in such highly qualified management. And there are going to be a lot more highly qualified people becoming available as victims of "synergies" and "cost savings" as part of any future mergers. Save Mart historically operated in such a lean manner with less management than it should have had that they will need to add a lot of people in the middle to expand and that will work out well for the various middle management (district, distribution, etc.) who supported stores that are going to be divested.
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