Taking Stock

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‘Round The Trade

Perhaps there’s a ray of hope for the Philadelphia beverage tax to bite the dust before too long. Just two months after a similar tax went into effect in Cook County (Chicago), the board of commissioners there voted to repeal that city’s soda tax by a 15-1 margin. The repeal becomes effective on December 1. Of course, there’s no direct correlation to Philadelphia’s poorly conceived and executed decision to pass a 1.5 cents per ounce beverage tax (higher than Cook County’s). However, the Chicago rollback will certainly give momentum not only to retailers and beverage vendors but also to thousands of Philadelphia consumers who feel unjustly burdened by having to sometimes pay more in tax than the retail price of a specific item. Other citizens are equally enraged about how the city’s estimates that the tax would raise $90 million annually for pre-kindergarten and community school programs will fall far short of that goal in its first year. According to Mike Dunn, spokesman for Philadelphia Mayor Jim Kenney, he does not see the Chicago repeal as a potential threat to the 10-month old statute. “The Cook County tax is very different, both in terms of tax structure and the political landscape.” I wouldn’t be so confident…coming off of its acquisition of meal-kit solutions firm Plated last month, Albertsons, whose Acme division has been hit hard by the Philly beverage tax (16 stores), has made another financial move in order to strengthen its cash position. It was revealed in an SEC filing on September 25, the Boise, ID-based chain has entered into an agreement to sell and lease back 71 of its stores to a Delaware-based limited-liability corporation in a transaction intended to raise up to $720 million. C.F. Albert LLC will purchase the properties and lease each one back for an initial term of 20 years, with Albertsons reserving eight options for five-year lease renewals, according to a filing by Albertsons with the U.S. Securities and Exchange Commission. The company expects the sale-leaseback of the properties, subject to customary closing conditions, will close by December 2. The filing also notes that 15 individual Albertsons entities were listed as sellers including stores from most of its banners – Acme, Jewel, Randall’s, Safeway and Vons. However, the filing does not include a list of the specific properties involved in the sale leaseback agreement…bad timing news of the month? HelloFresh, the German meal kit solutions company that is believed to be second in annual sales to Blue Apron, announced it is hoping to raise as much as $332 million to launch an IPO. With Albertsons now in control of Plated, Blue Apron’s stock selling at half of its $10 opening price and Amazon revving up to enter the meal solutions biz, it begs the question: what are these guys thinking?…Wal-Mart held its annual “investor’s day” earlier this month at corporate headquarters in Bentonville, AR. Perhaps the key announcement during the meeting with financial analysts was that the “Behemoth” said it will be opening fewer than 15 new SuperCenters next year. While Wal-Mart has been reducing the number of combo units it has built over the past few years (only 40 this year), the predicted bricks and mortar expansion (which also includes fewer than 10 new Neighborhood Markets) is a stunner. The planet’s largest merchant said it won’t be reducing its cap-ex budget (about $11 billion), but will instead redeploy those funds into continuing to grow its e-commerce. Doug McMillon, Wal-Mart’s CEO, noted “…we are making a deliberate choice that we are going to win e-commerce. If you think about the SuperCenters, they are largely built out. There will still be a few opportunities to do a few here and there.”…another sad chapter in the Sears saga – it is planning to close the last of its 130 stores in Canada. Like its American cousin, Sears Canada has been failing for many years (Sears Holdings CEO Edward S. Lampert’s ESL Investments holds a majority stake in Sears Canada). The company could face liquidation if no rescue deal be found by later this month. As for this month’s foreboding Sears Holdings’ news, “Slow Eddie” has reportedly personally loaned the troubled retailer $100 million to enable it to survive through the holiday season. That brings ESL’s tab to near $500 million in loans over the past few years to help Sears survive a little longer (or die a little slower). Tick, tick, tick!