Taking Stock

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Local Notes

Ahold reported strong first quarter earnings with worldwide sales up 4.4 percent (at constant exchange rates) for the period ended April 21. In the U.S., where it operates 774 stores, net sales were $8.1 billion, up 3.4 percent due to solid identical growth and benefiting from the inclusion of 15 former Genuardi stores acquired last year. The Amsterdam based retailer noted that its U.S. identical sales growth of 1.8 percent (1.9 percent excluding gasoline) was driven by more effective promotions and the strong performance in its Stop & Shop divisions during adverse weather events. The move to selling more generic drugs had a negative effect on sales growth; however this was offset by the positive effect from the timing of New Year’s Eve sales. Ahold USA gained market share in all four divisions, Ahold stated. Underlying operating margin was 4.1 percent compared to 4.2 percent last year. Ahold also announced a restructuring of its executive committee and has also named Hanneke Faber to the newly created position of chief commercial officer (CCO). Faber, who will report to Ahold CEO Dick Boer, joins the Amsterdam-based international retailer from Procter & Gamble, where she worked in various senior general management and marketing roles in the United States, Switzerland, Greece and the Netherlands. In her new role as CCO, Faber will be leading all global online and customer loyalty initiatives. Faber also will be part of the chains’ executive committee whose other members and responsibilities include: Boer: overall reshaping retail strategy, communications, external relations; CFO Jeff Carr: finance, information management, real estate, simplicity; chief corporate governance counsel Lodewijk Hijmans van den Bergh: legal & compliance, mergers and acquisitions, responsible retailing; Ahold USA COO James McCann: business operations, continental strategy; Ahold Europe COO Sander van der Laan: business operations, continental strategy; and a chief human resources officer who is not yet named a search is currently underway for a replacement for Marten Boisma, who is leaving the company): HR, leadership, organizational design. “Following the development and implementation of Reshaping Retail, Ahold is now at a point to adjust its leadership structure in a way that will best drive and support our growth phase,” said Boer. “Furthermore, I am delighted that we have Hanneke joining our company. Coming from a world-class marketing organization, she will provide us with key insights in leading online and customer loyalty initiatives going forward.” The members of the executive committee will officially assume their new duties on September 1…Costco, a true master of depots, could open as many as 150 new stores by 2018, according to CFO Richard Galanti. The Issaquah, WA sales machine has already opened 19 new club locations through the first nine months of its fiscal year and nine more are expected to debut over the next couple of months. Galanti, speaking during Costco’s quarterly conference call, said half of the warehouses would be built in existing markets and the remainder in new markets, both in the U.S. and overseas. And by the way, the nation’s largest club merchant once again posted some stellar numbers: earnings rose 18 percent to $459 million, overall revenue increased 7.8 to $23.6 billion and comp store sales (excluding fuel and foreign exchange rates) grew a mighty impressive 7 percent…more earnings stuff: Fairway Group Holdings Corp. earlier this month reported a fiscal fourth-quarter loss that widened as the Manhattan-based perishables oriented retailer said its one-time expenses were higher than a year ago. Fairway, which went public in April, stated that for the period ended March 31 it lost $14.4 million. That compares with a loss of $8.5 million a year earlier. Fairway’s one-time expenses rose to $4.4 million from $1.6 million. Revenue climbed 19 percent to $178.7 million from $150.3 million, caused in part by new stores. Same store sales rose 2.4 percent, excluding its store in Red Hook, Brooklyn. That store was temporarily closed starting in October due to Superstorm Sandy; it reopened on March 1. For the full year, Fairway reported a loss of $92.7 million compared to a loss of $36.7 million the previous year. Fairway plans to open two new stores (Nanuet, NY and in the Chelsea neighborhood of Manhattan) and a new central production facility in fiscal 2014. CEO Herb Ruetsch said that the company plans to open an additional three to four stores in each of the next few fiscal years…another retailer that produces seven figure weekly volumes, Village Super Markets, also posted its quarterly earnings earlier this month. Net income for the 29 store ShopRite member was $4.62 million in the third quarter of fiscal 2013 ended April 27, a decrease of 29 percent from the corresponding period last year. The Springfield, NJ retailer said that earnings declined primarily due to lower gross profit percentages and higher operating costs as a percentage of sales, partially due to investments in lower prices and enhanced customer service. Overall sales were $359.8 million in the third quarter of fiscal 2013, an increase of 3.7 percent. Village noted that sales gain was attributable to same store sales, as its Old Bridge, NJ store, acquired on January 29, 2012, is now included in same store sales. Same store sales increased due to higher sales in the two stores in Maryland, higher sales in one remodeled store and modest inflation. The high-volume merchant also noted that sales continue to be impacted by economic weakness, high gas prices and high unemployment, which have resulted in increased sale item penetration and trading down. Village predicted same store sales in fiscal 2013 would increase from 2.7 percent to 3.5 percent, also explaining that payroll costs increased due to efforts to enhance the customer experience and provide additional services, including its first Village Food Garden at the remodeled Livingston store and the addition of ShopRite from Home in several stores…Price Chopper cut the ribbon on its newest unit, a 50,000 square footer in Marshalls Creek, PA (Monroe County) in the heart of the Pocono Mountains. “We are so pleased to offer a brand-new, state-of-the-art supermarket here in MarshallsCreek,” said Jerry Golub, president and chief executive officer of the Schenectady, NY regional chain. “We look forward to providing Price Chopper quality, value and customer service to all who enter our doors and relish the opportunity to become a valued neighbor by supporting and nourishing the community around us.”…on a slightly smaller scale, but impressive in its own right, is the new store opened by Scott Karns and his family last month in Carlisle, PA. The 40,000 square foot former Nell’s unit is the eighth Karns store and a shining example of the entrepreneurial skills and passion for the business of an excellent independent grocer. Best of luck in your new digs…big month for the city of Danbury, CT as residents of that lovely FairfieldCounty berg witnessed two new store openings from each end of the pricing spectrum. Opening on May 17 was a new 38,000 square foot Whole Foods unit, the ninth WFM to open in the NutmegState and its fifth store to open in FairfieldCounty. And on May 22, PriceRite cut the ribbon on a 45,000 square foot unit at the location of a former Waldbaum’s (A&P) store. The new discount store marked the 11th PriceRite that Wakefern has opened in Connecticut and its 52nd overall…and speaking of A&P, the beleaguered retailer has agreed to pay $102,000 in fines and change its policies after it was accused of running a misleading frozen food month sweepstakes last March, New York State Attorney General Eric Schneiderman announced on June 6. The State of New York claimed that while A&P ran the promotion, it failed to properly notify customers that they could enter without making a purchase, which Schneiderman said violated consumer-protection laws. The Montvale, NJ-based chain had been cited by New York for similar violations in 2004 and 2005. “Under New York state law, companies that conduct sweepstakes must play by the rules by providing a level playing field for consumers, including those who do not make a purchase,” Schneiderman stated. “Today’s settlement ensures that A&P, which has previously ignored the law in this area, will provide an alternate method of entry which does not require a purchase and to fully inform consumers that no purchase is necessary to enter and win a sweepstakes.” The contest was called the “A&P Frozen Food Month 2013 Sweepstakes.” Consumers who purchased more than $50 in frozen-food products using an A&P Club Card were automatically entered in the sweepstakes at checkout. According to Schneiderman, “Winners received $350 in gift cards, and $43,400 was available in New York stores.” The AG also noted that store circulars said, “Every time your spending reaches $50 on frozen food, you’re automatically entered for a chance to win!” but failed to adequately detail that the entry could be made through the mail without a purchase; it was in the fine print. The official rules for the contest were not posted in stores, Schneiderman noted. “Because A&P failed to adequately disclose the alternate method of entry, consumers were largely unaware that there was a way to enter the sweepstakes without making a purchase. As a result, the vast majority of entrants and winners were consumers who made an in-store purchase,” Schneiderman explained form his office at the state capital in Albany. A&P acknowledged it will increase disclosure of sweepstakes’ rules and add new, larger signage. It will also advertise the alternative method of entry without a purchase with equal prominence. In addition to the fine, A&P has agreed to hire a compliance officer and add safeguards for its sweepstakes…about 150 miles south of Albany, a Bronx, NY Supreme Court judge has dismissed a lawsuit filed to attempt to halt online grocer FreshDirect from relocating to the Harlem River Rail Yards in Port Morris. Justice Mary Brigantti-Hughes tossed out the case on May 31. FreshDirect’s CEO Jason Ackerman who has been a driving force behind the new depot since it was first announced in February 2012, said: “We are eager to move forward with our plans to bring thousands of jobs to the Bronx.” The group opposing the move, South Bronx Unite, an organization comprised of local residents and advocates, filed suit in March, arguing that a 20-year-old environmental impact study of the land FreshDirect would build on is outdated. In addition, the group claimed that the deal violates the state’s original agreement with the Galesi Group, the development company that manages the Harlem River Yards, which calls for the area to be developed for freight train service to help reduce truck traffic in the area. The grassroots group also said that the move would bring more car and truck traffic to the neighborhood, making the Mott Haven neighborhood’s pollution problem even worse. South Bronx Unite plans to appeal the ruling…a tip of the hat to Quintin Frey, president of Turkey Hill Dairy, who will be retiring on August 4. As the third generation leader of the family-owned dairy (which is now owned by Kroger), Frey did a superior job of leading the Turkey Hill brand to new heights (in his 22 years as president, he has tripled the size of the company – sales are now $325 million annually). Beyond his business acumen, Quintin Frey is one of the good guys in our business – humble, accessible and easy to talk to. He’ll be staying on for a while as “brand ambassador,” but his leadership skills and his high level of ethics will be tough to replace…just before presstime we learned that Bozzuto’s has been named primary supplier for the new 13,000 Fare & Square store that will open this fall in Chester, PA. That non-profit unit is being subsidized by Philabundance, the food bank that serves the Greater Philadelphia area, which is seeking to provide more grocery outlets in food deserts…I’m sad to report several deaths of note over the past month. Now playing first-string organ in heaven is Ray Manzarek, the great keyboard player from The Doors, who passed away at the age of 76. While outrageous Doors singer Jim Morrison attracted most of the spotlight for the band’s still timely music (they haven’t played together since Morrison’s passing in 1970), Manzarek’s keyboard playing on his Vox Continental organ clearly provided the group’s foundation, so much so, that the four man ensemble didn’t utilize a bass player (Manzarek handled those duties with his left hand). Also leaving the planet was Jean Stapleton, who will be forever linked to her role as Edith Bunker, Archie’s somewhat dimwitted (but uncannily street smart) wife in the iconic TV show “All In The Family.” In reality, Stapleton was more than the malaprop portraying “Dingbat” who became the butt of many of her bigoted husband’s comments. Stapleton was an accomplished stage actress who also appeared in dozens of films and other television roles. She was 90…one of my favorite football players of all time has also left us. David “Deacon” Jones,” arguably the best defensive tackle in the history of the NFL, died at age 74 at his home near Los Angeles. In his day, there was no player feared more than Jones, who had the quickness of a linebacker and the strength of a nose tackle. His patented “head slap” move (now illegal) allowed him to beat offensive lineman (and knock them silly, to boot) and record an unofficial 173.5 sacks (a term he also coined) in his 14 year career which was mostly spent with the LA Rams. However, the NFL did not count quarterback sacks as an official stat until 1982, long after Jones retired. Recently joining the “Country Music Hall of Heaven” was single Slim Whitman. The 1950s country singer who encouraged a teenaged Elvin Presley when he made his professional debut in a concert headlined by Whitman. After fading from the limelight by the late 1970s, Whitman enjoyed a comeback of sorts when he sold millions of records via late-night infomercials. The success of those TV spots resulted in Whitman being abetted by “Tonight Show” host Johnny Carson, who good humoredly mocked Whitman’s schtick and held Slim Whitman lookalike contests. He was 90. And just before presstime we learned of the sudden and untimely passing of James Gandolfini, who in my opinion was one of the great American actors of the past 25 years. Gandolfini passed away in Rome, Italy where he was to attend a film festival and the young age of 51. While the New Jersey born actor (and Rutgers alumnus) will forever be known as brooding mob boss Tony Soprano, you can better judge his greatness and versatility in a couple of supporting roles before he became an American icon. If you have the opportunity to rent “True Romance” (1993) and “Get Shorty” (1995), you’ll easily recognize the power and charisma he displayed. “He was a genius,” said Sopranos creator David Chase. “Anyone who saw him, even in the smallest of his performances, knows that. He is one of the greatest actors of this or any time. A great deal of that genius resided in those sad eyes.”