‘Round The Trade
UNFI CEO Steve Spinner told analysts after the company’s Q4 financials release (a mixed bag in which profits decreased 15.6 percent and sales grew 10.7 percent) that he wanted to be at the “front end” of more industry consolidation, adding that consolidation is especially important in the grocery distribution segment because it drives scale. He acknowledged that the decision to divest Supervalu’s retail assets could result in the loss of some supply agreements. That’s almost guaranteed; if the combined entity is going to be successful, the level of customer defection will have to be minimal because UNFI will be adding more than $1.6 billion of new debt to its organization. In a related announcement, UNFI COO Sean Griffin, who was set to retire a few months ago, has been named incoming CEO of Supervalu. Griffin has supervised the UNFI transition since the acquisition was first announced in late July. The deal is still expected to close before the end of the year. BTW, multiple Supervalu independent retailers have complained to me about unacceptable service levels that have emerged at the wholesaler’s new distribution center in Harrisburg, PA that is now up and running. SVU shifted to the refurbished warehouse (the former Super Rite facility) after it “lost its lease” at its old distribution center in Denver, PA that Acme (Albertsons) now controls and owns…Amazon Go opened two Chicago stores in the past month, its first units outside of Seattle earlier this month. The new 1,700 square foot upscale and cashier-less c-stores offer salads, snacks, sandwiches and meal kits. In what was thought to be a test project (other units were planned for New York City and San Francisco), Bloomberg is reporting that “Godzilla” plans to roll out as many as 3,000 “Go” c-stores nationally by 2021. Meanwhile back in NYC, Amazon has opened a 4,000 square foot unit in the Soho section of Manhattan that features only highly-rated, best-selling merchandise. The “Amazon 4-Star” unit offers about 2,000 items – electronics, books, kitchen gadgets and toys – and includes an area of the store called “Trending Around NYC” featuring products popular in the Big Apple. These guys are reinventing the whole “speed to shelf” concept…Costco, which has been running on all cylinders for the past two years, capped its fiscal 2018 year with a bang. The nation’s largest club store operator posted a very healthy 7.8 (ex-gas) comp store increase at its U.S. for the 16-week period ended September 2. Other healthy signs: traffic grew by 4.9 percent and membership fee income (one of Costco’s underlying assets) climbed 5.7 percent to $997 million. Earnings, too, were solid with profits rising to $1.04 billion compared with $919 million in last year’s fourth period. At the end of its fiscal year, the Issaquah, WA-based club merchant operated 762 stores including 527 in the U.S. The newest Costco slated to open is on October 18 in Owings Mills, MD…Giant Eagle announced that it plans to acquire Ricker Oil Co., which operates 56 c-stores and fuel stations in Indiana. The deal, which is expected to close before the end of 2018, will enhance Giant Eagle’s c-store presence in the Hoosier State where it currently operates six GetGo units. Giant Eagle currently has 210 locations under the GetGo banner as well as 200 supermarkets of which about 140 are corporately-owned…Publix, which continues to struggle in the Richmond area, will open its 11th store in Virginia on October 17 in Williamsburg at the site of an original Ukrop’s (and later Giant) store. Corporately, the Lakeland, FL-based regional chain announced plans to expand its company headquarters. Approximately 700 new jobs will be created, and the highly profitable, employee-owned service-oriented merchant will add about 190,000 square feet of space to its HQ facility. The $25 million investment is expected to be completed by 2027…in other headquarter news, the nation’s largest dollar store operator, Dollar Tree, said that as part of its continuing integration of Family Dollar’s organization and support functions, the discount retailer plans to consolidate its store support centers in Matthews, NC (Family Dollar) and Chesapeake, VA (Dollar Tree) to Dollar Tree’s newly-completed office tower in the Summit Pointe development in Chesapeake. “Leadership from both banners has continued to work together to integrate our two organizations and invest in future growth,” said Gary Philbin, Dollar Tree’s chief executive. “By bringing our teams together into one location, we will further improve our ability to support our stores more effectively through enhanced collaboration, communication and teamwork. The completion of our expanded headquarters in Virginia will facilitate the most important phase of the integration and we are excited about the opportunities ahead for the Dollar Tree and Family Dollar banners.” The company has communicated plans to all associates and expects the store support center consolidation to be completed by fall 2019. While Family Dollar’s headquarters facility in Matthews will be closed following the consolidation, the distribution center in Matthews will remain open to serve Family Dollar stores…yet more new headquarters news: McCormick has officially opened its new global headquarters in Hunt Valley, MD. The new facility features a renovated 350,000 square foot office building and brings together 1,000 associates who were formerly housed in four separate buildings. “Our move to one global headquarters is a transformative step for McCormick – it exemplifies our continued commitment to the Baltimore region and the future of our truly global company. Our new location fosters greater collaboration and innovation, while also enhancing McCormick’s sustainability, improving employee health and wellness and bringing our passion for flavor to life. We are thrilled to be in this new space and I look forward to the great work we’ll do here together,” said McCormick chairman, president and CEO Lawrence Kurzius.
Sunbury, PA-based Weis Markets expanded its Shipt same-day delivery program on October 11 to include stores in Chambersburg, PA; Reading, PA; State College, PA; Stroudsburg, PA; Sunbury, PA; Williamsport, PA; York, PA; Frederick, MD; Hagerstown, MD; and the St. Mary’s peninsula in Maryland. Other stores that will utilize Shipt services include units in Binghamton, NY; and Mercer County and Morristown, NJ. Weis began its relationship with Shipt on September 6 with same-day delivery services available in Baltimore; Lewes, DE; Millville, DE; Millsboro, DE; Rehoboth Beach, DE; Allentown, PA; Lancaster, PA; Philadelphia, PA; Scranton, PA; and Wilkes-Barre, PA…B. Green & Co., which plans to open its third Green Valley Marketplace in Timonium, MD (a former Mars store) in early December, has expanded its redistribution business to the Delaware Valley. According to COO Rick Rodgers, the plan to move northward began when “we started out with the idea we would fill the void for Murry’s (retail stores departure) in the Baltimore-Washington market when they discontinued their DSD operations. However, we had numerous requests to move north into Philly, so we put a salesman in place and have created two routes that have continued to grow. B. Green has always been strong in the candy, tobacco and beverage categories, but what most people don’t know is we have really evolved and now have access to over 80,000 items and can deliver to a customer in as little as 48 hours. While most wholesalers are reducing SKUs and increasing turnaround times, we are expanding our variety and improving our delivery times. Our fresh poultry, frozen seafood and foodservice business has really picked up over the last year and customers have been pleasantly surprised at how competitively priced we are. We are really excited about rolling out our new e-commerce platform around the first of the year. With the diverse customer base that we serve this new system/portal is really going to enhance the customers experience when it comes to ordering, promotional activity, product sourcing, custom reporting as well as timely, relevant and interactive customer messaging and updates. Vendors and retailers that are not doing business with B. Green might want to see what opportunities they could be missing. We are evolving as a wholesaler and are looking to build great partnerships. You can’t be in business for over 100 years if you don’t deliver as promised and maintain strong relationships,” the veteran, but still youthful industry executive proclaimed…it’s been three weeks since it cut the ribbon on its newest store in Lancaster, PA, and we can report that Wegmans continues to do land office business at its 98th unit. As expected, the seven-figure weekly volumes that the 120,000 square foot store is generating are having a significant impact on the other operators in the market not only supermarkets, but mass merchants, drug chains, c-store and even some restaurants in the area. We also learned that the uber-retailer is close to securing a new site in Annapolis, MD at the site of the AT&T building on Riva Road. We know that Wegmans has explored the Annapolis area for years and if this deal is consummated, this location would wreak havoc on one of the most demographically favorable markets in the Mid-Atlantic. And the Rochester, NY-based merchant, which plans to open four stores in the Raleigh-Durham, NC market over the next few years, said it will scale back the size of its 130,000 square foot unit in suburban Cary, NC to 103,000 square feet. The company said that it is downsizing the store to meet the demands of the changing marketplace and added that the new design will actually add space to its café and outdoor seating area…and the fireworks surrounding Campbell’s Soup aren’t over yet, either. After the soup maker’s board elected to sell its international operations and fresh food business (instead of its entire business), activist investor Dan Loeb was none too pleased. The founder of hedge fund Third Point LLC, Loeb was insistent that the Campbell’s board didn’t go far enough and should sell the entire company (apparently Loeb’s first choice, KraftHeinz, wasn’t interested). He then assembled a 12-person board of his own, stating, “Unfortunately, this board’s persistent failure to discharge its current fiduciary duties leaves us no choice but to seek to replace the entire board with our shareholder slate,” the hedge fund entrepreneur wrote in a letter. In a separate letter, Loeb also blasted Campbell’s board for allowing ousted CEO Denise Morrison to collect more than $60 million in compensation during her seven-year tenure. One particular bone of contention was Morrison’s appearance earlier this year at the World Economic Forum in Davos, Switzerland. “In the midst of the company’s crisis, the board authorized Morrison to hobnob in Davos at the World Economic Forum with the global elite – at shareholders’ expense – rather than stay home and run the ailing company,” Loeb asserted. The showdown is set for November 29, the date of Campbell’s annual meeting…at Rite Aid, chief executive John Standley will no longer also serve as the Camp Hill, PA drug merchant’s chairman of the board. Current board member Bruce Bodaken will assume that title. According to the Central Pennsylvania Business Journal, Bodaken stated that “fresh perspectives will be significant assets as we continue to oversee the development and implementation of our strategy to best position Rite Aid to create long-term value for stockholders.” Bodaken, who once served as CEO of Blue Shield of California, will have to summon all the experience, business prowess and personal “pookie dust” from his collection if he hopes a board shakeup will revitalize Rite Aid…Kings/Balducci’s has named Stephen Corradini as its senior VP-merchandising and marketing for the upscale merchant. Corradini previously served as VP-South region for Whole Foods…Village Super Market, Inc., the ShopRite entity controlled by the Sumas family, posted flat comp store sales and slightly decreased earnings in its fourth quarter ended July 28. The Springfield, NJ-based firm said comps slid by 0.3 percent on total sales of $413.6 million. The high-volume merchant, which opened its 30th supermarket in June in the Bronx, said competitive openings impacted two of the company’s stores. For the full year, Village posted earnings of $25.1 million on sales of $1.6 billion…Seasons Kosher Supermarkets, which claims to be the largest kosher supermarket chain in the country, has filed for Chapter 11 bankruptcy protection and is seeking a buyer. Founded in 2010 by Zvi Bloom and Mayer Gold, the Queens, NY-based specialty retailer operates eight stores in New York, New Jersey and Maryland and listed its assets at $31 million and its liabilities at $42 million. In its filing, the company said it had sales of $63 million though September 18, the day it sought Chapter 11 status…we have some obituaries to report this month. Passing on were two very underappreciated musical talents. Marty Balin, co-founder of the legendary San Francisco band Jefferson Airplane, has died at the age of 76. In the early 1960s, Balin co-owned a nightclub, The Matrix on Fillmore Street, where he met Paul Kantner. Together, they formed the original Jefferson Airplane, which included guitarist Jorma Kaukonen, singer Signe Anderson, drummer Jerry Peloquin and bassist Bob Harvey. Peloquin and Harvey were quickly replaced by Skip Spence and Jack Casady. Anderson performed on the Airplane’s first album and then was replaced by Grace Slick. Balin possessed a beautiful tenor voice and wrote many of the band’s best (but not most popular) songs including “Comin’ Back To Me” and “Volunteers.” He left the band in 1971 and later joined its second incarnation “Jefferson Starship.” Since 1978, he had performed as a solo act…Otis Rush, one of the great and unsung Chicago blues guitarists, has passed away at 84. Born in Philadelphia, MS, Rush moved to Chicago in the late 1940s and began to make a name for himself playing at local clubs on the city’s Southside. Rush’s guitar style was more jazzy than raw, and, while he wasn’t as well known as B.B. King, he was greatly admired by the next generation of blues players who followed him, including Jimmy Page, Stevie Ray Vaughn and Eric Clapton. “At the time I was growing up, there were a handful of people who made that kind of mark: Freddie King, Buddy Guy, B.B. King, Otis Rush and Magic Sam. Otis, he was fantastic – a great player,” Clapton said…and Peggy Sue has also passed away. Yes, that Peggy Sue, from the great Buddy Holly song of the same name. Peggy Sue Gerron Rackham, 78, went to high school with Holly in Lubbock, TX and became friends with the great singer and songwriter. And here’s the back story about the song: Jerry Allison, who was the drummer in Holly’s band, The Crickets, persuaded Holly to change the original name of the song – “Cindy Lou” – so that he could impress Peggy Sue. It must have worked, because Allison and Peggy Sue ultimately got married…Anne Russ Federman, 97, has also left us. Federman, her dad and two of her sisters, ran the great Russ & Daughters deli/appetizer business that has been a landmark on New York’s Lower East Side (Houston Street) since 1914. What was unusual about this family business is that Anne’s father and founder Russ Federman made his daughters partners and renamed the business to include them in the 1930s – something unheard of at the time. Russ & Daughters, now in its fourth generation of family ownership, is a personal “must go” if you’re jonesing for some deli in the city that invented it…and if you’re a Philadelphia Eagles fan or an NFL fan in general (over the age of 50), you’ll remember Tommy McDonald, one of the best pass receivers of his generation (late 1950s to late 1960s). McDonald passed away late last month at the age of 84. Before there was Wes Welker or Julian Edelman, there was Tommy McDonald, a small, fast wideout (5’9” and 175 pounds) with a big heart and a lot of charisma. He scored 84 touchdowns in a 12-year career that included six Pro Bowls and an NFL Championship in 1960 in which caught a 35-yard TD pass from Norm Van Brocklin. McDonald was inducted into the Pro Football Hall of Fame in 1998.