BJ’s receives buyout offer
New York City — Leonard Green & Partners and CVC Capital Partners said Friday they are making a joint buyout bid worth an undisclosed amount for BJ’s Wholesale Club. The two private equity firms revealed their plans in a Securities and Exchange Commission filing on Friday. The bid price was not disclosed.
In February, BJ’s announced it was exploring a sale. In March, Leonard Green is already the chain’s larger shareholder, with a 9.3% stake.
BJ’s spokeswoman Cathy Maloney said the company wouldn’t comment on its process of exploring strategic offerings until the process has ended, the Associated Press reported.
BJ’s operates more than 190 warehouse clubs in 15 states.
Unions and Walmart: Same story, different year
It had been awful quiet on the organized labor front for a while, so news this week of the creation of a new union-backed anti-Walmart group serves as a reminder that unions are the equivalent of a bad case of herpes to Walmart. The discomfort and visible symptoms associated with their organizing activities occasionally subside, but there is no cure and eventually the company experiences another outbreak.
That’s what happened this week with several high profile media reports detailing the creation of a group called “OUR Walmart,” Organization United for Respect at Walmart. The group purports to be a nonunion organization and intends to press for better pay, benefits and most of all, more respect at work. That is how the New York Times characterized the entity in a story that appeared on Wednesday. The following day, workers donned bright yellow shirts and marched on the company’s home office where they were met in the parking lot by Walmart labor relations and media relations executives, according to photos posted on the group’s website, Ourwalmart.org.
Although the site depicts the organization as a grass-roots effort by Wal-Mart workers and there is no mention of union involvement, the Times reported that, “the United Food and Commercial Workers has provided a sizable sum — the union will not say how much — to help the group get started. The union has also paid hundreds of its members to go door to door to urge Wal-Mart workers to join the group.”
The site does indicate the group is membership based with a monthly membership fee of $5 or annual fee of $60.
Other revelations provided by the Times include the involvement of ASGK Public Strategies, a consulting firm long associated with David Axelrod, President Obama’s top political strategist. In addition, the past few weeks the group has organized gatherings of 10 to 80 workers in Dallas, Seattle, Los Angeles and other cities, meeting inside churches, fast-food restaurants and employees’ homes, where the workers chewed over how they would like to improve Wal-Mart. One big concern, they said, was low wages, according to the Times.
The piece went on to quote several workers who didn’t think they were making enough money, including a four year veteran who earns $11.40 an hour on an overnight stocking crew in Lancaster, Calif., and an employee in the shoe department of a Dallas store who said she earns $8.90 an hour after three years.
The Wall Street Journal picked up on the story Thursday morning with an article detailing the planned march on Walmart’s home office. The Journal and the Times both quoted Walmart spokesman David Tovar dismissing the organization as the latest union attempt to attract media attention to further its political agenda. The strategy appears to have worked.
Kroger is comping, so why can’t Walmart?
Repeated assurances by Walmart’s most senior executives that their top priority is growing U.S. same-store sales may be reassuring news to investors, but the company’s ability to do so by the end of the year now is a firmly established expectation. This is especially true, given the recent performance of once of the company top grocery competitors.
Kroger is knocking the cover of the ball and reported shockingly good first-quarter results this week. The company produced same-store sales growth, or identical-store sales growth as they like to call the approximate metric in the food channel, of 4.6%. That gain was better than the 3.8% analysts expected and the company parlayed the top line performance into profits. Earnings per share of 70 cents were well in excess of the 64 cents consensus estimate, and the prior-year performance of 58 cents. Looking ahead to the remainder of the year, the company raised its forecast for identical store sales growth to a range of 3.5% to 4.5% from a prior range of 3% to 4% also took up its full-year profit outlook to a range of $1.85 to $1.95 from $1.80 to $1.92 previously.
Product cost inflation, estimated to be 3.5% during the quarter, clearly helped the sales performance as Kroger indicated it is successfully passing suppliers’ price increases to customers, but the company also noted, as have other food retailers, that the pricing environment is rational, which means Walmart is passing through increased costs as well, and that should help its comp numbers even without a meaningful increase in customer traffic.