There are two Ralphs left in the entire Temecula valley, two Vons one of which is literally across the street from an Albertsons, and 8 Albertsons. Do you see them spinning off 8 stores and keeping only 4? By the way the two Vons branded stores are the worst in that group? Do you see them exiting South Orange County (only one Vons left, dozen plus high performing Albertsons)? I don't see any way they could let all Albertsons branded stores go to SpinCo and exit two of their best markets almost entirely (South OC and Temecula valley). No way they can complete the transaction by spinning a nameplate intact. In both of those markets every Vons needs to go to SpinCo as they're the worst condition and worst performing stores they've got. If they were to spin the Albertsons brand then they would have to rebanner every store in OC and probably Riverside county entirely in the process. The problem there is we know that rebannering stores in SoCal is disasrerous for sales (see Lucky/Alb merger, Haggen debacle, etc.). So a rebannered store may be exponentially more difficult to establish a value for, which basically means that they would not be able to get any cash for any rebannered store in an auction due to the fact that sales history is now irrelevant. So if anything sold it would likely be a crapshoot on a lower price lease, near end of term, and probably a $1 winning bid. Stater did get stores like that in the Lucky merger but didn't bite on any in the Haggen bankruptcy. I don't remember if they bought more than a handful in the Albertsons Safeway merger either?retailfanmitchell019 wrote: ↑December 16th, 2022, 12:35 pm Stater Bros. might not be gone from Escondido for long... I expect them to buy either the Ralphs or Vons on Escondido's east side assuming the Kroger/Albertsons merger goes through. I think the nearby Albertsons will go into SpinCo along with all of the Albertsons brand stores.
And Stater is a smart operator. Why should they spend one penny to help subsidize this merger? They know they are already taking share from Ralphs and Albertsons/Vons every day in their core market of the Inland Empire but are less successful elsewhere. They don't need more stores anywhere to increase their overhead and dilute their profits. They clearly have not been able to make a dent in San Diego as the few stores they operate there are noticeably slower than anywhere else they operate in. Look at the Oceanside store off the 78 and Jefferson which I think still has old Lucky decor after two decades. They're barely limping along in SD and can't figure out the market. I doubt they're doing well in the more remote areas they've tried out to the North like Pasadena.
SD is a completely different animal and requires a different assortment, different pricing, and ultimately isn't worth their investment as historically it hasn't paid off. SD County is one of the few places where you can still find incredible quality fresh local produce at local produce stands within ten minutes of your home. Ethnic stores and big boxes have massive share. Costco rules the market and literally can't build warehouses fast enough. Local chains like Frazier Farms take big share of produce and meat. When you factor in the many options SD County is probably already oversaturated with conventional stores. All SD stores up for bid will go to locals like Frazier, ethnic like Northgate or Hmart, or real estate developers to be razed for residential. I don't think Stater will take any SD stores unless they are $1+ongoing concern winning bids where they have short lease term left so they minimize risk. Maybe they will take a handful of South OC, but there are far less Ralphs and Albertsons overlaps than you might think there.