FINANCE

Supervalu completes sale of five chains to Cerberus-led investor group

BY Marianne Wilson

New York — Supervalu on Thursday announced the completion of the sale of its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores and related Osco and Sav-on in-store pharmacies to AB Acquisition LLC, an affiliate of a Cerberus Capital Management-led investor consortium. The stock deal is valued at $3.3 billion, including $100 million in cash and $3.2 billion in debt assumption.

With the transaction complete, Supervalu now consists of three business units made up of Independent Business, a leading food wholesaler which serves nearly 2,000 stores across the country; Save-A-Lot, the largest hard discount grocery chain in the United States with more than 1,300 stores; and five retail banners: Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s.

“As we move forward, Supervalu will continue as one of the largest wholesale grocery providers in America serving nearly 2,000 independent retailers in 43 states; we plan to continue growing our hard discount Save-A-Lot format that includes over 1,300 stores nationwide; and we will operate five, strong regional retail banners.” said Sam Duncan, Supervalu president and CEO.

With the close of the transaction, Robert Miller, president and CEO of Albertsons LLC, becomes Supervalu’s new non-executive chairman replacing Wayne Sales, who has served as executive chairman since August 2012. Supervalu also announced that Sales will remain on the board as a director along with four other current board members — Donald Chappel, Irwin Cohen, Philip Francis and Matthew Rubel. As previously agreed upon by Supervalu and Symphony Investors, five directors voluntarily resigned from the board effective Thursday, including Ronald Daly, Susan Engel, Edwin “Skip” Gage, Steven Rogers and Kathi Seifert.

As part of the transaction, Supervalu also announced that Symphony Investors, a Cerberus-led investor consortium, completed its tender offer resulting in the acquisition of 11.7 million shares at a purchase price of $4.00 per share in cash. In addition, pursuant to the terms of the transaction, the company issued 42.5 million new shares of common stock (approximately 19.9% of the outstanding shares) to Symphony Investors at a purchase price of $4 per share in cash to the company, or approximately $170 million. The tender offer and primary stock issuance establish Symphony Investors as Supervalu’s largest shareholder with 21.2% of total outstanding common shares.

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OPERATIONS

Starbucks to expand loyalty program to Teavana and supermarkets

BY Marianne Wilson

Seattle — Starbucks Coffee Co. is expanding its customer loyalty program to the supermarket channel and its Teavana stores as it looks to double membership from 4.5 million members at the end of October 2012 to approximately nine million members by the end of fiscal 2013.

Starbucks made the announcement at the company’s annual shareholders on Wednesday in Seattle. Also at the meeting, Starbucks investors rejected a shareholder proposal to prohibit the chain from making political contributions or forming a political action committee.

Speaking at the meeting, Adam Brotman, chief digital officer, said that, starting in May, customers will be able to accrue reward points for purchases of Starbucks packaged coffee in grocery channels, with the points redeemable in Starbucks stores. The program is expected to be expanded to include other Starbucks products sold through grocery channels this fall.

Starbucks is also integrating the program into its Teavana brand. Beginning next month, registered customers who make purchases with a Starbucks Card or through the Starbucks mobile app at any of over 300 Teavana retail stores will be able to earn Stars points for their purchases.

Brotman also announced that Starbucks mobile payment platform is now generating over three million U.S. mobile payment transactions per week.

In other news, Starbucks announced the launch of a nonprofit corporation with a $1 million seed grant to introduce job skills, leadership and apprenticeship programs to young people across the company’s supply chain. The chain is also expanding its support for U.S. manufacturing through an order for 100,000 ceramic mugs from a supplier in Ohio whose operations Starbucks helped expand through previous purchasing commitments.

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SUPPLY CHAIN

Survey: Importers split as to spring sales growth

BY Marianne Wilson

New York — Importers and manufacturers who sell to America’s major retailers are split as to whether they believe they will see growth and / or reductions in sales for the spring season, according to Capital Business Credit, a non-bank lender that services the retail sector.

According to the quarterly Global Retail Manufacturers and Importers Survey, 50% of importers of retail goods are experiencing an increase in orders this spring as compared to last year, while 50% are experiencing a decrease or no change from the previous year. Of those surveyed who are having a stronger spring, the majority are experiencing growth between three and 10%.

Respondents indicated that concessions and the new payroll tax are matters of concern for them in 2013. When asked if retailers are asking for more concessions this spring season, 58% of those surveyed indicated that retailers are asking for more concessions than they did in 2012.

When it comes to the payroll tax, 48% of importers worry that their business is facing a negative impact due to the increased tax in 2013. This will force retailers to continue to use sales and promotions to move merchandise which will likely cut into margins all around the sector.

"Consumers are spending less money on non-necessities due to the new payroll tax," said Andrew Tananbaum , executive chairman at CBC. "In order for retailers to get ahead in 2013, they will have to depend more heavily on discounting than they had to in the past."

While the results may seem daunting, there is a glimmer of hope. Of those surveyed, 72% are experiencing reorders for spring merchandise. Also, many manufacturers and importers are expecting retail sales for the full calendar year to be either the same or stronger than they were in 2012.

"Even though the economic factors are working against retailers – particularly those that sell apparel – importers remain cautiously optimistic about the year as a whole," said Tananbaum. "There is no crystal ball to see what the future holds, but the strength of reorders paints a positive picture."

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