Taking Stock

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‘Round The Trade

There’s nothing like pressure from a well-capitalized hedge fund to spur a company from changing direction (ask Supervalu). This time it’s long beleaguered Campbell Soup which for more than a decade has fumbled, stumbled and tumbled its way to poor results and questionable acquisitions. First, longtime CEO Denise Morrison was shown the door and more recently activist investor Dan Loeb and his Third Point organization took a 5.65 equity stake in the Camden, NJ CPG company. And almost instantly, after Loeb threaten to force a sale of the company, Campbell’s announced it would look to sell international operations (Arnott’s, Kelsen) as well as its once prized refrigerated foods business (Bolthouse Farms) which combined account for more than $2 billion in annual sales. The decision to sell Bolthouse is especially eye-opening considering that Campbell’s paid $1.55 billion only six years ago. Previously, Loeb stated that a sale of the entire company to another food manufacturer was the only justifiable outcome. No word on what he feels about this partial remedy…it’s been no secret that Ahold Delhaize USA’s largest division – Stop & Shop – has also been the company’s brand that has struggled most in recent years. New and diverse competition has cut into Stoppie’s still dominant share and parent firm Ahold Delhaize has frankly been cheap with its capital expenditure allocation to a division that operates more than 400 stores and stretches from Massachusetts to New Jersey. Now comes news that the parent firm will finally begin throwing some earnest money Stop & Shop’s way that will initially result in introducing a new format focusing on “fresh” later this year. Frans Mueller, who became CEO of Ahold Delhaize in July, said that the Stoppie rollout will feature fresh meals, ready-made meals, ready-to-cook, ready-to-eat meal kits, different types of packaging sizes and healthier food. About 20 stores will be unveiled by the end of 2018. We should learn more about this and also about the chain’s Peapod Digital Labs and the related integration of its e-commerce platforms at the company’s “Investor Day” to be held in New England November 13…PepsiCo is acquiring Israeli sparkling water company SodaStream in a deal valued at $.2 billion. Six weeks before her previously announced retirement as CEO, Indra Nooyi said the purchase “fit Pepsi’s goal of making more nutritious products while limiting our environmental footprint.”…Tops Markets, the troubled Williamsville, NY retailer, has filed its reorganization plan with U.S. Bankruptcy Court. The new plan will reduce Tops’ debt and provide a “sustainable capital structure and provide the financial flexibility” to create a stronger competitor. As part of the reorg, Tops will close 10 stores in Central and Western New York. The company filed for Chapter 11 protection in February 2018…in Walmart news, the planet’s largest merchant reported its biggest same store sales increase in a decade when it posted comps of 4.5 percent at its U.S. stores during the its second quarter. The company earned $2.9 billion on overall sales of $128.6 billion. Traffic and average sales transaction also jumped by more than 2 percent…somewhat surprisingly, Target also enjoyed a strong second quarter with comps jumping an impressive 6.5 percent (its most in 13 years) and profits increasing 3.6 percent to $1.13 billion…Kroger, the nation’s largest pure-play supermarket chain, announced that it will venture outside the U.S. for the first time after inking a deal with China-based global ecommerce merchant Alibaba to sell the supermarket’s chain Simple Truth natural and organic private label brand in China. Simple Truth’s U.S. annual sales surpassed the $2 billion mark this year. And in local Kroger news, there’s a potential battle brewing in Mechanicsville, VA (Hanover County) where one of Kroger’s highest volume stores in the Richmond area – Atlee Road – has been aided by a new expanded roadway which opens the area up to a more direct and continuous traffic flow. Weekly business at the $1 million plus store has already increased with the opening of the Atlee Road extension and with Publix scheduled to open a new 49,000 square foot unit on Brandy Creek Road and Route 301 in Mechanicsville in a couple of months, this could be a competitive clash coming. Thus far, in the 14 months since Publix debuted in the Richmond area it’s been no contest as the established operator, Kroger, has easily outpointed Publix (with nine Richmond area stores now open) at every location where the two retailers compete… Procter & Gamble, long known for product innovation, is apparently trying to corner the market on Internet acronyms. The giant Cincinnati-based CPG firm is attempting to trademark popular phrasings such as “LOL,” “NBD” and of course, the often used “WTF,” which seems anathema to the P&G’s long-standing image as a conservative company…more Sears and Kmarts are set to close. Yes, 46 more units (33 Sears, 13 Kmarts) are ready to become extinct in the next two months. Only a handful are in the Mid-Atlantic/Northeast – Newark, DE; Milford, CT, Riverhead, NY (Kmarts) and Holyoke, MA; Taunton, MA; Salem, NH; Manchester, NH; Mays Landing, NJ; Glens Falls, NY; New Hyde Park, NY, and Fairfax, VA (Sears). The numbers under Sears Holdings CEO “Slow” Eddie Lampert don’t lie. When Sears and Kmart merged in 2005, there were about 3,500 stores between the two banners. Today, that number is approximately 900. Moreover, the Hoffman Estates, IL retailer has lost an incredible $11.2 billion since 2010. That truly is reverse Midas touch material…the increasingly popular Natural Products Expo East, which holds its annual show later this month (September 12-15) will be leaving its longtime Baltimore base after next year’s show. The reason: it has outgrown the space at the aging Baltimore Convention Center. The 2020 show will shift to Philadelphia where the convention center is twice as large as Baltimore’s…Jason Ackerman, co-founder and CEO of online grocer FreshDirect, is leaving the company. David McInerney, who along with Ackerman founded the New York based internet merchant in 1998, will assume the role of chief executive and join FreshDirect’s board. The move comes at a curious time after the company just moved into a new headquarters facility in the South Bronx and recently announced the launch of FoodKick, an on-demand business for New York City residents that offers a curated selection of food, alcohol and essentials. FreshDirect, largely funded by venture capital money, has also recently extended its footprint as far south as Washington, DC…a couple of months ago I reported on the dissatisfaction of several licensees over the new Save-A-Lot management team (led by former Lidl U.S. president Kenneth McGrath) who took the helm at the Earth City, MO discount merchant about 18 months ago. Now several more licensees, which control 60 percent of S-A-L’s stores, have chimed in to express their frustration with the new policies and direction of the company. Quick message to McGrath: you’d better become a better listener and take a harder look at who pays your meal ticket. Quickly! Let the licensees have more flexibility on how they operate their stores and greater input about the how to improve the overall company…sadly, there are several notable obituaries to report. From the industry, our condolences to the Alper family on the passing of Fred Alper, 79, who ran one of the largest food brokerages in the country (New England based Morris Alper & Sons). When I began my reporting career in New England in 1973, Fred Alper proved to be great teacher. Extremely intelligent (A.B. from Brown, MBA from Harvard) with an intense, steely personality, Fred had a soft spot for those who wanted to work hard and learn. I was fortunate enough to have been helped by him. He took his family-owned business (begun by his grandfather in 1932) to new heights and represented some of the country’s largest CPG suppliers. He voluntarily stepped down as CEO at age 55 (Morris Alper was later sold to Acosta) and spent his “retirement” as a professor at Babson College, while also serving on more than 20 boards (including Kettle Cuisine and King Arthur Flour) and becoming a generous philanthropist…from the political sphere, the passing of Senator John McCain, 81, was also sad, but so many lessons in grace, honesty and courage could be learned from a man who was imprisoned in a North Vietnamese prison of was camp for more than five years (and refusing preferential treatment to leave early because his father was an Admiral). As he approached death with great dignity and bravery, McCain revealed in his memoir published in May, “It’s been quite a ride. I’ve known great passions, seen amazing wonders, fought in a war and helped make peace. I’ve lived very well and I’ve been deprived of all comforts, I’ve been lonely as a person can be and I’ve enjoyed the company of heroes. I’ve suffered the deepest despair and experienced the highest exultation, I made a small place for myself in the story of America and history of my times.” Wow! McCain also twice ran unsuccessfully for president and leaves a legacy that is unique and powerful…Neil Simon, 91, the Pulitzer Prize winning playwright and screenwriter whose unforgettable comedies included “The Odd Couple,” “The Sunshine Boys,” and “Brighton Beach Memoirs,” passed away last month in New York City. Beginning his career in the early 1950s as a staff writer for Sid Caesar’s great TV show “Your Show of Shows” with other notable cohorts such as Mel Brooks, Larry Gelbart and Carl Reiner, Simon soon migrated to writing comedic screenplays. His first hit was “Come Blow Your Horn” (1961) which was also made into a film starring Frank Sinatra. At one point in the late 1960s, he had four shows running on Broadway at the same time. All told, Simon received 16 Tony nominations (winning three times) and earned four Oscar nominations and a Pulitzer Prize. In 1983, the former Alvin Theater was renamed the Neil Simon Theater, making him the only living person to have a Broadway theater named after him…earlier last month, we learned of the death of Aretha Franklin, 76, arguably the greatest (and most influential) female R&B singer ever. Born in Memphis and raised in Detroit, she began singing in the choir of her father’s church as a child. She had two children by the age of 15 and despite having a unique voice that was both thunderous and sweet, struggled to achieve success as a singer. It wasn’t until she left Columbia Records for Atlantic Records in 1967 that her career exploded as a soul singer with albums such as “I Never Loved A Man The Way I Love You” (1967); and “Lady Soul” (1968). She was the first female artist inducted into the Rock and Roll Hall of Fame in 1987 and even had a very funny scene in the original “Blues Brothers” movie in 1980. While she sang some of the greatest soul songs of all time (“Respect,” “Chain of Fools,” “Natural Woman”) perhaps the most notable example of her vocal range and power could be heard at the Grammy Awards in 1998, when with less than 30 minutes notice and without rehearsal, she stepped in to substitute for the ailing opera tenor Luciano Pavarotti to sing “Nessun Dorma,” the first time she ever attempted to sing an operatic song. Check it out at http://www.dailymotion.com/video/x2z58ma…and just before presstime, we learned of the death of actor Burt Reynolds, who in the 1970s was Hollywood’s most popular movie actor and whose films were huge box office successes. Some of those films, such as “Smokey and the Bandit” and “Cannonball Run” (and subsequent sequels of both), were mocked for their corniness and impacted Reynolds’ reputation as a quality actor. However, Reynolds, 82, was indeed a fine actor. His roles in “Deliverance” (1972), “The Longest Yard” (1974), “Semi-Tough” (1977),“The End” (1978) and “Boogie Nights” (1997) proved his acting mettle. And, earlier this year I saw “The Last Movie Star,” a semi-autobiographical movie about Reynolds’ life, in which he starred. Reynolds was also slated to appear in Quentin Tarantino’s next film, “Once Upon A Time In Hollywood” which opens next summer. Clearly, his acting skills were very much underrated. All told, the man who once posed nude in a 1972 issue of Cosmopolitan, and also played halfback for Florida State, was one of the most interesting characters of the last 40 years and will be remembered by many of his fans for his engaging personality and quick wit.