FINANCE

Supervalu looks to major restructuring

BY Marianne Wilson

Supervalu Inc. wants to separate its retail operations and grocery wholesale divisions.

The company proposed a reorganization of its corporate structure into a holding company structure that would separate its wholesale and retail operations. Among other benefits, Supervalu said the move would facilitate its ongoing strategic transformation, which includes a plan to sell certain retail assets as it continues to focus on its growing wholesale business, and “better segregate the liabilities of the company into their respective business segments.”

In other benefits, Supervalu said the new structure would increase its strategic, business and financial flexibility, and enable the company to leverage its capital loss carryforward and generate about $300 million in cash tax benefits over the next 15 years.

Supervalu has shedding its retail assets. In April, the company announced plans to sell its Shop’ n Save supermarket chain. In May, Supervalu said it had completed the previously announced sales of 21 of its 38 Farm Fresh stores. (The sale of the two banners will leave Supervalu with 114 supermarkets under three banners: Cub Foods, Hornbacher’s and Shoppers, according to Supermarket News.)

“We have been executing a strategic transformation of our business over the last two years to become the wholesale supplier of choice for grocery retailers across the United States, while also executing initiatives to deliver long-term stockholder value,” said Mark Gross, president and CEO, Supervalu. “The proposed holding company structure is another significant and important undertaking by our team that would support and advance our transformation by further separating our wholesale and retail operations in a tax efficient manner.”

Supervalu stockholders will vote on the holding company proposal at the company’s 2018 annual meeting.

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Private equity firm makes ‘best and final’ bid for Rent-A-Center

BY Marianne Wilson

Vintage Capital Management has upped its offer for Rent-A-Center.

Rent-A-Center confirmed it has received a proposal from the Florida-based private equity firm to acquire all outstanding shares of the rent-to-own retailer for $14.00 per share in cash. Last fall, Vintage made a $13.00 a share offer to acquire the company.

“As we have communicated on numerous occasions, we are committed to completing an acquisition of RCII as quickly as possible,” Vintage Capital stated, adding that its offer, which is described as its “best and final,” expires at 5 p.m. on June 15.

Rent-A-Center said its board, with the assistance of outside financial and legal advisors, is reviewing the Vintage offer “to determine the course of action that is in the best interest of the company and all its stockholders.”

“As previously announced, the board is prepared to enter into a transaction that it believes will achieve its objectives of maximizing value for stockholders and providing certainty of closing,” Rent-A-Center stated.

Rent-A-Center on Sunday said it had completed its strategic review process and had not received any proposals that met its objectives for a sale. Hours later, it issued another statement in which it said it had received an increased offer to buy the company from a previous bidder. But the retailer said the letter didn’t include financial commitment details for how a purchase would happen.

Rent-A-Center has been under pressure to go private from activist hedge fund Engaged Capital, which gained three seats on the company’s board last June.

Rent-A-Center owns and operates approximately 2,400 stores in the United States, Mexico, Canada and Puerto Rico, and approximately 1,250 Acceptance Now kiosk locations in the United States and Puerto Rico. Rent-A-Center Franchising International, a wholly owned subsidiary of the company, is a national franchiser of approximately 250 rent-to-own stores operating under the trade names of “Rent-A-Center,” “ColorTyme,” and “RimTyme.”

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Lands’ End starts year on strong note

BY Marianne Wilson

Specialty lifestyle retailer Lands’ End showed momentum in its first quarter, narrowing its loss and posting sales above expectations.

Lands’ End reported a net loss of $2.6 million, or 8 cents a share, for the period ended May 4, compared with a loss of $7.8 million, or 24 cents a share, in the year-ago period. The average per-share loss estimate of analysts was 17 cents.

Revenue rose 12% to $299.8 million, above the estimate of $285.0 million. Retail segment revenue declined 34% to $26.5 million, primarily due to there being few Lands’ End in-store shops at Sears stores. Same-store sales declined 18.9%.

In May, Lands’ End unveiled its updated store format, the first of four to six new locations the retailer is scheduled to open in 2018. The company, which has said it is not relying on Sears for future growth, reportedly plans to open between 40 to 60 locations during the next five years.

“Our first quarter results represent the fourth straight quarter of top line growth and third quarter of profitability growth, demonstrating the continued progress we have made across our strategic initiatives,” said Jerome S. Griffith, CEO and president. “We saw excellent growth in our uniform business with the successful launch of our Delta Airline business.”

Looking ahead, Griffith said, data analytics will remain “the driving force behind everything we do as a customer-centric organization.”

“As we further refine our product assortment, advance our digitally driven efforts, enhance our distribution network, and further elevate our infrastructure to support the business, we remain well positioned to achieve our long-term objectives,” he said.

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